Mumbai – Shares of HDB Financial Services, the non-banking finance arm of HDFC Bank, dropped 3% on Friday, hitting a new intra-day low of ₹761.05 on the BSE. The stock has now corrected 15% from its post-listing high of ₹891.65 reached on July 3, 2025, and is nearing its IPO issue price of ₹740.
The sell-off follows the company’s disappointing Q1 FY26 earnings, which triggered a 10% decline in share price over the past two weeks.
📉 Q1 FY26 Earnings Highlights:
- Profit After Tax (PAT): ₹568 crore, down 2% YoY
- AUM: ₹1.1 trillion, up 14.7% YoY
- Disbursements: ₹15,171 crore, down 8% YoY
- Net Interest Income (NII): ₹2,092 crore, up 18.3% YoY
- Net Interest Margin (NIM): Improved +10 bps QoQ
Despite better NIM, sluggish disbursements and rising asset quality stress have concerned investors. Gross Stage 3 loans surged 16% QoQ to ₹2,800 crore, now 2.6% of total loans, with a higher Provision Coverage Ratio (PCR) of 56.7%. Gross Stage 2 loans rose 41% QoQ to ₹2,400 crore, with a lower PCR of 20.4%.
🔍 Sectoral Headwinds & Strategy Shift
Disbursement slowdown was largely driven by weak performance in two segments:
- Asset Finance (Commercial Vehicles): Continued pricing pressure and weak demand. The company shifted strategy toward used vehicles to boost yield (~+30 bps QoQ).
- Unsecured Business Loans: Growth was deliberately moderated to manage rising asset quality concerns.
Brokerages cite this cautious approach, particularly in unsecured lending and CV financing, as contributing to the subdued performance.
🌐 Industry Trends and Peer Insights
Commentary from peer Bajaj Finance reflects broader sectoral caution. It noted a slowdown in MSME-linked industries, consumer leverage issues, and risk of delinquencies, prompting tighter lending controls.
🏦 HDB’s Loan Profile
HDB’s lending is split across:
- Enterprise Lending: 39.3%
- Asset Lending: 38%
- Consumer Finance: 22.7%
The loan book is 73% secured and 27% unsecured, catering primarily to salaried professionals, SMEs, and self-employed individuals.
