The brokerage added, "NII rose 16 per cent/1 per cent YoY/QoQ (in line with JMFe) as calculated NIM contracted 12 bps QoQ. Disbursement growth improved to 19 per cent YoY (16 per cent in Q1 FY27) aided by a sharp uptick in enterprise lending, while AUM growth remained muted at 12 per cent YoY."
On asset quality, JM Financial said, "Asset quality deteriorated, with net slippages (annualised) rising to 2.4 per cent (1.8 per cent in Q1 FY27)."
JM Financial also flagged potential profitability pressures from the lender's fixed-rate book, which accounts for around 76 per cent of its portfolio, in a rising interest rate cycle.
It added that the IRDAI consultation paper, if implemented as proposed, could affect profitability, given that insurance commissions accounted for around 39 bps of average assets in FY26.
"We cut FY27–28E EPS by 3–8 per cent and value the stock at 2x FY28E BVPS (earlier 2.5x), factoring in RoA/RoE of ~2.5 per cent/15 per cent over FY27–29E. Maintain ADD with a revised TP of Rs 650 (earlier Rs 820)," JM Financial said.
Nuvama Institutional Equities also cut its target price on HDB Financial, citing the softer Q2 FY27 performance and near-term margin and asset quality pressures.
"Given the softer Q2FY27 performance and near-term margin and asset quality pressures, we reduce TP to Rs 675 from Rs 700, valuing the stock at 1.8x Sep'28E BV (1.6x at CMP). Retain 'HOLD'," Nuvama stated.
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