HDB Financial Services Q1FY26 Results: Shares Down 4%, Should You Buy, Sell or Hold?

HDB Financial Services reported a 2.4% YoY drop in net profit to ₹568 crore for Q1FY26, driven by a rise in credit costs. Despite this, market analysts remain optimistic about the company's long-term growth prospects. The share price declined 3.66% to ₹810.3 during intra-day trading. Analysts recommend long-term investors hold their positions and consider adding more on every dip.

HDB Financial Services, a subsidiary of HDFC Bank, reported a marginal decline of 2.4% year-on-year (YoY) in net profit to ₹568 crore for the quarter ended June 2025 (Q1FY26), according to its latest earnings announcement. This drop was primarily attributed to a significant rise in credit costs, which jumped 62.4% YoY to ₹670 crore. Despite the decline in net profit, the company's asset under management (AUM) grew by 14.7% YoY to ₹1,09,690 crore, and gross loans expanded by 14.3% YoY to ₹1,09,342 crore [1].

The company's net interest income (NII) increased by 18.3% YoY to ₹2,092 crore, driven by a 17.3% YoY jump in interest income to ₹3,831 crore. However, non-interest income only grew by nearly 8% YoY to ₹330 crore. The net interest margin (NIM) remained stable at 7.7% in Q1FY26, up from 7.6% in Q4FY25. The gross non-performing assets (GNPA) increased to 2.56% in Q1FY26, compared to 1.93% in Q1FY25, while the net non-performing assets (NNPA) jumped to 1.11% from 0.77% a year earlier [2].

Market analysts remain optimistic about HDB Financial Services' long-term growth prospects, despite the quarterly earnings setback. The company's strong financials, diversified loan portfolio, and presence in underserved markets are seen as key drivers for future growth. The share price, however, declined by 3.66% to ₹810.3 during intra-day trading following the earnings announcement [3].

Analysts recommend long-term investors hold their positions and consider adding more shares on every dip, as the company's fundamentals remain strong. The recent IPO, one of the largest in recent times, attracted considerable investor interest and provided a valuable opportunity for investors to tap into the burgeoning Indian financial services market [4].

References:
[1] https://www.livemint.com/market/stock-market-news/hdb-financial-q1-results-profit-declines-2-4-yoy-to-rs-568-crore-in-first-earnings-announcement-post-listing-11752579132426.html
[2] https://upstox.com/news/market-news/earnings/hdb-financial-services-q1-fy-26-net-profit-drops-2-4-yo-y-loan-growth-strong-at-14-3/article-178125/
[3] https://www.business-standard.com/companies/quarterly-results/hdb-financial-q1fy26-net-profit-dips-2-4-on-higher-credit-costs-125071501236_1.html
[4] https://www.archivemarketresearch.com/news/article/hdb-financial-ipo-10-key-insights-analysis-57051