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HDB Financial Services shares plunge over 8% after weak results; brokerages cut targets

HDB Financial Services shares fell to ₹536.65 after the company reported its second-quarter results. JM Financial and Nuvama Institutional Equities lowered their price targets, citing pressure on asset quality, margins and near-term profitability while retaining their respective views on the stock.

Editor: AI News 24x7 Published: 15 Oct 2026, 06:56 PM Updated: 15 Oct 2026, 06:56 PM

HDB Financial Services shares plunge over 8% after weak results; brokerages cut targets.

HDB Financial Services shares dropped more than 8% late on Thursday, reaching a record low of ₹536.65 after the financial services company released its second-quarter results. The decline followed a weak earnings report and lower price targets from brokerages.

JM Financial said the company delivered a weak quarter. Distribution momentum improved, but asset quality deteriorated. The brokerage also said profit after tax was 2% below its estimate because lower operating expenditure did not fully offset other pressures.

Profit and return indicators

Profit after tax rose 34% year on year but declined 1% from the previous quarter. Return on assets and return on equity fell to 2.4% and 14.3%, respectively, compared with 2.5% and 14.9% in the first quarter of financial year 2027.

JM Financial's assessment also cited a 16% increase in net interest income and separately recorded a 1% year-on-year increase. Calculated net interest margin declined by 12 basis points quarter on quarter.

Growth in business loans helped total growth reach 19% annually. Assets under management growth, however, remained steady at 12% annually.

Asset quality and margin concerns

JM Financial said asset quality had weakened, with the margin increasing to 2.4%. It also pointed to potential pressure from the lender's fixed-rate loans during a period of rising interest rates.

Fixed-rate loans account for approximately 76% of HDB Financial Services' portfolio, according to the brokerage's assessment. JM Financial further said profitability could be affected if the proposed IRDAI consultation paper is implemented in its stated form.

The brokerage noted that insurance commission represented approximately 39 basis points of average assets in financial year 2026. It linked the regulatory proposal to a possible impact on earnings.

Brokerages lower price targets

JM Financial cut its earnings-per-share estimates by 3% to 8% through the end of financial years 2027-28. It also reduced the valuation applied to the stock to 2 times book value per share at the end of financial year 2028, from 2.5 times earlier.

The revised valuation assumes return on assets and return on equity of approximately 2.5% and 15%, respectively, by the end of financial years 2027-29. JM Financial retained its ADD rating but lowered the price target to ₹650 from ₹820.

Nuvama Institutional Equities also reduced its target for HDB Financial Services. It cited the weak second-quarter performance and expected near-term pressure on margins and asset quality.

Nuvama lowered its price target to ₹675 per share from ₹700. The two brokerage revisions add to the market's negative reaction following the results announcement.

Conclusion

HDB Financial Services shares reached ₹536.65 after weak second-quarter results, while brokerages highlighted asset-quality and margin concerns. JM Financial retained its ADD rating but cut its target to ₹650, and Nuvama reduced its target to ₹675.