Mortgage lender Housing Development Finance Corp rejected a research report from Macquarie on Thursday that questioned its accounting practices and downgraded its rating.
Macquarie downgraded the blue-chip company to "underperform" from "outperform" and set a target price for HDFC of Rs 550, nearly 15% below its Rs 644.3 closing price on Thursday.
It questioned HDFC's accounting over the past two years and said it believed that the methods it had used meant earnings for the years ending March 2011 and 2012 looked as though they had been overstated by 38% and 24% respectively.
HDFC's chief executive, Keki Mistry, said the company had complied with Indian accounting standards and rejected the report.
"We think that it is completely misplaced language," Mistry told Reuters by phone from London.
In a statement, HDFC said that on several occasions it had clarified its position on its accounting for investors as it related to the use of funds raised from zero-coupon bonds for investment in its subsidiaries.
HDFC has a market value of $17.4 billion.
The Macquarie analysts who wrote the report could not immediately be reached for comment.
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