Nomura Upgrades HDB Financial, Sees Margin Target Despite Rate Rise

what happened

According to Market Talk, citing a note from Nomura analysts, HDB Financial Services management is aiming to keep its net interest margin at roughly 8% over the medium term despite higher borrowing costs. The lender plans to pass the 25-basis-point repo increase by the Reserve Bank of India in October on to customers with floating-rate loans against property, while rate changes in other segments will be adjusted more carefully.

Second-quarter net profit came in below Nomura's forecast, although the lending business broadly matched expectations. The brokerage still expects loan disbursal momentum to remain healthy. It has raised its rating on the shares to buy from neutral and set a target of 790 rupees.

The stock ended the session down 7.7%, at 538.60 rupees.

why it matters

The rating upgrade came on a day the shares fell, highlighting the gap between the brokerage's more positive view and the market's reaction to quarterly results that fell short of forecasts. For investors tracking Indian lenders, the key questions remain how quickly higher policy rates feed into loan pricing and whether margins hold near the targeted level.

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