Detailed Scoring Analysis
Financial Health
6.8/10
Weight: 25%
Strong profitability (ROE 16.39%) offset by high debt-to-equity ratio (5.93x). Healthy cash reserves of ₹950.46 crore provide good liquidity cushion.
Strong profitability (ROE 16.39%) offset by high debt-to-equity ratio (5.93x). Healthy cash reserves of ₹950.46 crore provide good liquidity cushion.
Growth Prospects
8.2/10
Weight: 25%
Excellent customer growth (28.22% CAGR) with strong expansion in underbanked segments. Revenue growth from ₹11,306 Cr to ₹16,300 Cr demonstrates solid momentum.
Excellent customer growth (28.22% CAGR) with strong expansion in underbanked segments. Revenue growth from ₹11,306 Cr to ₹16,300 Cr demonstrates solid momentum.
Competitive Positioning
7.5/10
Weight: 20%
7th largest diversified NBFC with HDFC Bank backing. Strong brand recognition with CARE AAA & CRISIL AAA ratings providing competitive advantage.
7th largest diversified NBFC with HDFC Bank backing. Strong brand recognition with CARE AAA & CRISIL AAA ratings providing competitive advantage.
Management Quality
8.0/10
Weight: 15%
Excellent execution track record with improving asset quality (Gross NPA reduced from 4.99% to 1.9%). Strong governance standards inherited from HDFC Bank.
Excellent execution track record with improving asset quality (Gross NPA reduced from 4.99% to 1.9%). Strong governance standards inherited from HDFC Bank.
Valuation
4.5/10
Weight: 15%
Premium valuation with P/B ratio of 6.9x raises concerns. Trading at elevated levels compared to historical averages and sector peers.
Premium valuation with P/B ratio of 6.9x raises concerns. Trading at elevated levels compared to historical averages and sector peers.
Key Strengths
- Strong HDFC Bank parentage provides credibility
- Excellent 28% customer CAGR growth
- Improving asset quality (NPA: 4.99% → 1.9%)
- Diversified loan portfolio across segments
- AAA credit ratings from top agencies
Key Concerns
- High debt-to-equity ratio (5.93x)
- Premium valuation (P/B: 6.9x)
- Intense competition from Bajaj Finance
- Low interest coverage ratio flagged
- Regulatory risks in NBFC sector
Investment Recommendation
Strong fundamentals and excellent growth prospects backed by HDFC Bank make this an attractive investment despite valuation concerns. The company's focus on underbanked segments and improving operational metrics provide solid long-term potential.
MODERATE BUY