The NBFC reported a 38.3% year-on-year increase in net profit to ₹785 crore for the quarter, compared with ₹568 crore a year earlier. Net interest income (NII) rose 20% to ₹2,509 crore from ₹2,091 crore in the corresponding quarter last year.
Asset quality improved during the quarter, with gross non-performing assets (GNPA) declining to 2.34% and net non-performing assets (NNPA) easing to 1.04%. Credit cost also moderated to 2.32% of the average loan book.
The company’s loan book crossed ₹1.22 lakh crore, registering an 11.4% year-on-year increase, while its customer base expanded 18.6% to 23.9 million. Consumer finance continued to gain traction, accounting for 25.5% of the overall loan book, reflecting an improving portfolio mix.
HDB Financial also maintained a strong capital position, with its capital adequacy ratio (CRAR) at 21.3%, providing sufficient headroom to support future growth.
According to the management, consumer finance remained the key growth driver during the quarter, with the portfolio expanding 21% year-on-year and 7.5% sequentially. Consumer durable loans grew by more than 50% year-on-year, while auto loans rose 21%.
Enterprise lending also remained resilient, with mortgage loans growing 13.2% year-on-year. The gold loan portfolio more than doubled, aided by the expansion of gold loan services across more than 500 branches.
Growth in the asset finance business remained relatively muted, with commercial vehicle loans rising around 10% and construction equipment financing growing about 8% year-on-year, as the company continued to exit select high-ticket, lower-return products.
Looking ahead, management expects business momentum to improve from the second quarter and aims to gradually return to around 18% loan growth. Asset finance growth is expected to recover once portfolio restructuring is completed, while business loan growth is likely to strengthen from the second quarter and accelerate further in the third quarter.
The company also sees significant room for expansion in its gold loan portfolio, expects net interest margins to remain above 8%, and is targeting a return on assets (RoA) of around 2.5%. Credit costs are expected to remain near 2.3% in the steady state, while the cost of funds is likely to stay broadly stable in the second quarter.
Management said it will continue to monitor external factors such as the monsoon, the possibility of El Niño, fuel prices and geopolitical developments.
Brokerage firm Motilal Oswal reiterated its ‘Neutral’ rating on the stock and maintained a price target of ₹810 per share.
The brokerage said current valuations largely reflect the company’s medium-term growth prospects. It added that it would look for clearer evidence of stronger execution on loan growth, improved ability to navigate industry and product cycles, and a structural – rather than cyclical – improvement in return ratios before turning more constructive on the stock.
HDB Financial Services shares ended 1.52% higher on Wednesday at ₹755.20. The stock is down 1% so far this year.
First Published: Jul 16, 2026 7:13 AM IST
