HDB Financial Shares Drop 4% As Q1 Profit Declines 2% YoY To Rs 568 Crore; Should You Buy?
HDB Financial Share Price: Shares of HDB Financial Services declined 3.7% to touch a new low of Rs 810.30 on the BSE on Tuesday after the company reported a 2% year-on-year drop in net profit for Q1 FY26, at Rs 568 crore, compared to Rs 582 crore in the corresponding quarter last year.
Despite the marginal fall in profit, the company reported robust operating performance. Net Interest Income (NII) rose 18% YoY to Rs 2,092 crore, supported by strong loan book expansion and higher interest-earning assets. The net interest margin (NIM) also improved slightly to 7.7% for the quarter.
Total net income increased 14% YoY to Rs 2,726 crore, while pre-provision operating profit grew 17% YoY to Rs 1,402 crore.
As of June 30, 2025, gross loans stood at Rs 1.09 lakh crore, up 14% from Rs 95,629 crore a year ago. Assets under management (AUM) rose by 15% YoY to Rs 1.09 lakh crore, reflecting sustained credit demand across borrower segments.
However, provisions weighed on profitability. Loan losses and provisions rose sharply to Rs 670 crore, compared to Rs 412 crore in Q1 FY25, pulling down profit before tax to Rs 733 crore from Rs 784 crore in the year-ago period.
Asset quality deteriorated during the quarter. Gross Stage 3 loans increased to 2.56% of total advances, from 1.93% a year earlier, while Net Stage 3 loans rose to 1.11%, up from 0.77%. The provision coverage ratio on Stage 3 assets declined to 56.70%, from 60.24% in Q1 FY25.
While HDB Financial continues to post solid operational growth led by double-digit expansion in lending and income, the rise in provisions and weakening asset quality remain areas of concern for the coming quarters.
Brokerage firm Emkay Global has maintained a 'Buy' rating on the stock with an unchanged price target of Rs 900, saying that one weak quarter does not alter its investment thesis.
On the NSE, HDB Financial stock closed 0.3% lower at Rs 841 on Tuesday. Since listing, the stock has hovered near its issue price of Rs 840, with a post-listing high of Rs 892.
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