HDB Financial Services delivered its highest-ever quarterly profit after tax of ₹785 crore for Q1 FY27, representing a 38.3% year-on-year increase from ₹568 crore in the corresponding quarter last year. According to the latest regulatory filing, the non-bank lender's net interest income grew 20% to ₹2,509 crore from ₹2,091 crore year-ago, while net total income rose 16.8% to ₹2,872 crore compared with ₹2,726 crore in the corresponding quarter last year. The company's profit before tax increased 46.7% to ₹1,055 crore from ₹733 crore year earlier, demonstrating strong operational performance across key financial metrics. Notably, net interest margin (NIM) expanded to 8.4% in Q1 FY27, as against 7.7% in the year-ago period, indicating improved profitability and operational efficiency.
HDB Financial's customer base expanded 18.6% to 23.9 million during the quarter, as reported by CNBC TV18. The company's loan book crossed ₹1.22 lakh crore, registering an 11.4% year-on-year increase, with gross loan book growing 11.4% to ₹1.21 lakh crore from ₹1.09 lakh crore as of June 2025. Consumer finance continued to gain traction, accounting for 25.5% of the overall loan book, reflecting an improving portfolio mix. Consumer durable loans grew by more than 50% year-on-year, while auto loans rose 21% during the quarter. Mortgage loans grew 13.2% year-on-year, and the gold loan portfolio more than doubled, aided by expansion of gold loan services across more than 500 branches. Disbursements increased 16.2% during the quarter, reflecting strong lending momentum and business growth.
The company's asset quality improved significantly during the quarter, with gross non-performing assets (GNPA) declining to 2.34% from 2.56% a year earlier, while net non-performing assets (NNPA) eased to 1.04% from 1.11%. Credit cost also moderated to 2.32% of the average loan book, as reported by CNBC TV18. The provision coverage ratio on stage 3 assets stood at 55.73%, compared with 56.70% a year ago. The company maintained a strong capital position with capital adequacy ratio (CRAR) at 21.3%, providing sufficient headroom to support future growth. Secured loans comprised 74% of the gross loan book, providing stability to the lending portfolio, while the company's branch count stood at 1,710 spread across 1,165 cities and towns.
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 sees significant room for expansion in its gold loan portfolio and expects net interest margins to remain above 8%. Management is targeting a return on assets (RoA) of around 2.5% and expects credit costs to remain near 2.3% in the steady state, while the cost of funds is likely to stay broadly stable in the second quarter. The company will continue to monitor external factors such as the monsoon, possibility of El Niño, fuel prices and geopolitical developments.
Shares of HDB Financial Services closed 1.52% higher at ₹755.20 on Wednesday, according to latest market data. The stock has gained 1.52% in the past week and 9% over the month, indicating positive investor sentiment following the strong quarterly results. On a year-to-date basis, the stock is down 1%. 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 and 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. Nomura has reiterated its 'Neutral' rating with a target price of ₹790, indicating an upside potential of 5.1%, noting that the management expects the cost of funds to remain rangebound through the second quarter of FY27.
