HDB FINANC SER (HDBFS)

FairStock Score: 58/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Profit growth of 36.33% significantly outpacing sales growth of 12.79% suggests operating leverage and earnings momentum.
• Promoter holding of 74.15% aligns management with minority shareholders.
• Piotroski F-Score of 7/9 indicates broadly sound financial health.
• PEG ratio of 1.03 makes the valuation look reasonable on a growth-adjusted basis.
• Zero debt/equity, if verified, would be an exceptionally strong balance sheet for an NBFC.

Concerns

• Free cash flow is deeply negative at ₹-12,467 Cr, raising questions about earnings quality and capital intensity.
• Stated ROE of 1,827% is inconsistent with book value of ₹180.90 and P/E of 25.2, suggesting a data or reporting anomaly.
• Dividend yield of only 0.28% means minority shareholders depend entirely on capital appreciation.
• P/B of 3.65 and P/E of 25.20 leave little margin of safety if growth decelerates or credit costs rise.

AI Analysis

At ₹659.55, HDBFS trades at 25.2 times earnings and 3.65 times book value of ₹180.90. That is not a Graham-style bargain. But this is a quality NBFC with promoter skin in the game—HDFC group holds 74.15%—and the numbers show a franchise compounding at a decent clip. Sales grew 12.79% and profit jumped 36.33%, giving a PEG near 1.03. For a financial company, that is not outrageous if asset quality holds. The balance sheet says debt/equity is zero, which would be remarkable for a lender. I am skeptical by nature; a zero-debt NBFC needs a hard look at the definition of 'debt' and off-balance-sheet liabilities. Free cash flow is deeply negative at minus ₹12,467 Cr, which tells me either the business is expanding aggressively or earnings are not being converted into cash. In lending, growth consumes capital, but I would want the cash flow story explained. The Piotroski F-Score of 7/9 suggests financial health is broadly sound. Promoters own 74.15%, so minority shareholders are along for the ride with aligned operators. The stated ROE of 1,827% is obviously inconsistent with a book value of ₹180.90 and a P/E of 25.2, so I would not trust that figure until the annual report confirms it. ROCE of 9.79% is modest for a business trading at 3.65 times book. I would classify this as a fast grower, not a deep value stock. The growth-adjusted valuation is reasonable, but negative operating cash flow and anomalous ROE demand diligence. I need to see consistent credit costs, loan growth, and a credible explanation of the 'zero debt' position. If those check out, HDBFS could be a steady compounder; if not, the margin of safety is thin.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer