HDB Financial down 3% today, nears IPO price; why is the stock falling?

Shares of HDB Financial Services, subsidiary of HDFC Bank, hit a new low of ₹761.05, down 3% on the BSE in Friday's intra-day trade, and was trading close to its IPO issue price of ₹740 per share.

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HDB Financial Services share price today

 

Shares of HDB Financial Services (HDB), subsidiary of HDFC Bank, hit a new low of ₹761.05, falling 3 per cent on the BSE in Friday's intra-day trade. 

 

The stock of the non-banking finance company (NBFC) was trading at its lowest level since listing on July 2, 2025. It has corrected 15 per cent from its high of ₹891.65 touched on July 3. HDB was trading close to its initial public offer (IPO) issue price of ₹740 per share.

 

In the past two weeks, the stock price of HDB has slipped 10 per cent after the NBFC reported disappointing June quarter (Q1FY26) results.

 

Q1 FY26 results - HDB Financial Services

 

HDB announced Q1FY26 results with profit after tax (PAT) of ₹568 crore, down 2 per cent year-on-year (YoY). Asset under management (AUM) grew by 14.7 per cent YoY to ₹1.1 trillion, with sluggish disbursement numbers at ₹15,171 crore, down 8 per cent YoY. Net interest income grew 18.3 per cent YoY at ₹2,092 crore.

 

Despite this, net interest margin (NIM) expanded +10 bps sequentially led by a shift towards a better yielding book. The management has indicated more room for margin expansion as ~95 per cent of the bank loans are EBLR linked resulting in fast transmission of the rate cut.

 

Gross stage 3 loans increased 16 per cent quarter-on-quarter (QoQ) to ₹2,800 crore or 2.6 per cent of total loans with ~70 bps QoQ higher provision coverage ratio or Provisional Coverage Ratio (PCR) of 56.7 per cent. While gross stage 2 loans increased 41 per cent QoQ to ₹2,400 crore or 2.2 per cent of total loans with a ~260 bps lower PCR at 20.4 per cent. Albeit the management remains comfortable at a lower PCR for stage 2 loans. Reported credit costs increased ~5 bps QoQ to 2.5 per cent.

 

Besides seasonality, the slowdown in disbursements comes largely on account of a slowdown in 2 segments – asset finance (CV) and unsecured business loans. In asset finance, which is largely light commercial vehicle or LCV, the company has reworked their asset strategy and moved towards higher yielding or used finance segment over the last one year. This has resulted in a yield improvement of ~30 bps QoQ, according to InCred Equities.

 

The new CV segment continued to face pricing pressure due to higher production costs along with subdued demand from the other end. While in unsecured business loans, the company was cautious to grow given the looming asset quality stress. These 2 segments also contributed largely to rising asset quality stress on the books, the brokerage firm said.

 

Bajaj Finance management commentary

 

Bajaj Finance management while annoucing the Q1 results said that they remain cautious on delinquencies trend in certain pockets which could impact growth and earnings momentum in FY26.

 

Management highlighted that consumer leverage remains a key area of concern, prompting the company to implement corrective measures across certain product lines to limit exposure to borrowers with multiple active loans.

 

Management highlighted that the macro environment remains challenging. Of the 17 key MSME-linked industries tracked by Bajaj Finance, 13 are showing signs of a slowdown, while three are in outright contraction. This weakness is largely attributed to the broader economic deceleration and subdued credit demand across segments, Motilal Oswal Financial Services said.

 

HDB is lending products are offered through three business verticals which is Enterprise lending (39.3 per cent), Asset lending (38 per cent) and consumer finance (22.7 per cent). The company’s loan book comprises 73 per cent secured loans and 27 per cent unsecured loans, with its customer base primarily consisting of salaried individuals, self-employed professionals, and business owners.