HDB Financial shares slip 4% post Q1 results; should you buy, sell or hold?

Business Standard

16-07-2025

HDB Financial Services share price: Shares of recently listed HDB Financial Services, the non-banking finance subsidiary of HDFC Bank, came under pressure following the announcement of its financial results for the first quarter of 2025–26 (FY26). The company's share price declined 3.66 per cent to ₹810.3 during intra-day trading on Wednesday, after it reported a 2.4 per cent year-on-year (Y-o-Y) drop in net profit to ₹568 crore for Q1FY26, driven by a rise in credit costs. However, market analysts remain optimistic about the company's long-term growth prospects despite the near-term weakness.
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HDB Financial Services Q1FY26 results
Earlier on Tuesday, July 15, the NBFC posted their first quarterly earnings since their market debut, post-closing hours. During the quarter under review, its net interest income (NII) during Q1FY26 rose 18.3 per cent Y-o-Y to ₹2,092 crore, while non-interest income increased nearly 8 per cent Y-o-Y to ₹330 crore. HDB Financial's credit cost jumped 62.4 per cent Y-o-Y to ₹670 crore in Q1FY26, against ₹412 crore in the corresponding period last year. In Q4FY25, credit cost stood at ₹634 crore. The company's net interest margin (NIM) stood at 7.7 per cent in Q1FY26, up from 7.6 per cent in Q4FY25.
Should you buy, sell or hold?
Prashanth Tapse, senior vice president, Mehta Equities, noted that investors are booking profits within a very short period due to earnings that disappointed street expectations. 'Despite strong loan and net interest income growth, concerns have emerged regarding asset quality and provisions, which are weighing on profitability. This is the key reason why PAT declined marginally by around 2–3 per cent,' said Tapse.
While there may be short-term consolidation in the non-banking financial company (NBFC) sector, Tapse advised long-term investors to hold their positions and consider adding more on every dip. 'The sector has already seen three to four interest rate cuts passed on to customers. This will likely put pressure on net interest margins (NIMs). So for another quarter or two—Q1 and Q2—the NBFC sector as a whole may experience some pressure. All the top five players are expected to feel the impact in terms of growth,' he explained.
That said, Tapse believes this presents a great opportunity to accumulate HDB Financial as a long-term investment. He pointed to the historical performance of HDFC Group companies: 'HDFC Bank, HDFC Life, and HDFC AMC all consolidated for years before delivering strong long-term performance. I expect a similar trajectory for HDB Financial.'
Echoing similar views, Gaurang Shah, head investment strategist at Geojit, also recommended investors invest in HDB Financial Services from a long-term perspective. 'The results for just one quarter should not be taken into consideration when making long-term investment decisions in the company's shares,' said Shah.
Notably, the company's shares listed on the BSE at ₹835 per share on July 2 this year, compared to the IPO issue price of ₹740.
For those who missed the HDB Financial Services IPO, Shah suggested that it may be a good opportunity to buy the stock for the long term if the price comes close to the IPO issue price.
Notably, analysts at Geojit had recommended investors subscribe to the public issue of HDB Financial Services, citing its diversified lending portfolio, strong parentage support, omni-channel distribution platform, granular lending model, expanding customer base, asset quality, and promising growth prospects. ALSO READ |
Here's what technical charts suggest
From a technical point of view, Hardik Matalia, derivative analyst, Choice Broking, believes that the HDB Financial stock has immediate support at ₹800, with a stronger cushion placed around ₹777. 'As long as the stock sustains above its IPO price of ₹700, it remains a good candidate for buying on dips. Investors who received IPO allotment and were aiming for short-term gains may consider booking profits at current levels. However, those with a long-term view can continue to hold and look to accumulate further on declines,' said Matalia.
For those who missed the IPO, Matalia believes that this range-bound phase offers an opportunity for partial accumulation, with plans to add more on any meaningful corrections. 'Overall, the price action indicates stability around key support zones, making it a stock to watch in the coming sessions,' said Matalia.