HDB Financial shares drop as Q2 profit slips marginally; Q2 breakdown here

HDB Financial Services shares fell 1 per cent after the NBFC reported a slight drop in its profit for Q2 FY26

Shares of HDB Financial Services fell over 1 per cent on Thursday after the company reported a slight drop in its profit in the second quarter of the current financial year (Q2 FY26).

 

The non-banking financial company's (NBFC) stock fell as much as 1.24 per cent during the day to ₹734.2 per share, the biggest intraday fall since October 6 this year. The stock pared losses to trade 1.1 per cent lower at ₹735 apiece, compared to a 0.34 per cent advance in Nifty 50 as of 09:25 AM. 

 

Shares of the company snapped a four-day winning streak. The counter has fallen nearly 12 per cent since its listing in July this year. HDB Financial Services has a total market capitalisation of ₹60,935.82 crore. 

 

HDB Financial Q2 results 

The subsidiary of HDFC Bank reported a 1.6 per cent year-on-year (Y-o-Y) decline in net profit to ₹581 crore for Q2 FY26, as provisions for stressed loans rose sharply. Sequentially, net profit was up 2.4 per cent from ₹568 crore in the first quarter ended June 2025.

 

The company’s Net Interest Income (NII) rose 19.6 per cent Y-o-Y to ₹2,192 crore in Q2 FY26 from ₹1,833 crore a year earlier, and 4.8 per cent sequentially from ₹2,092 crore in Q1 FY26. Net Interest Margins (NIMs) improved to 7.9 per cent in September 2025, compared with 7.5 per cent a year ago and 7.7 per cent in the previous quarter. 

 

Management expects strong momentum in the Auto, Two-Wheeler, and Consumer Durables segments, supported by government measures to boost consumption, healthy Kharif sowing, and improving farm incomes.

 

The company’s gross stage-three assets (NPAs) increased to 2.81 per cent in Q2 FY26, from 2.1 per cent a year earlier and 2.56 per cent in June 2025. Gross loans rose 13 per cent Y-o-Y to ₹1.11 trillion as of September 30, 2025.  

Analysts on HDB Financial earnings

According to Motilal Oswal, HDB Financial reported a muted quarter, with modest loan growth and disbursement activity affected by factors such as heavy rainfall and demand deferment ahead of anticipated Goods and Services Tax (GST) rate cuts. Asset quality weakened further, leading to sequentially higher credit costs. The only positive was a 20 basis point expansion in NIM during the quarter, driven by a decline in the cost of borrowings.

 

Motilal Oswal noted that lender offers exposure to India’s high-growth, underpenetrated retail lending market. With assets under management (AUM) of around ₹1.11 trillion and approximately 21 million customers, the company has built a granular, largely secured loan portfolio and demonstrated sound credit discipline. Backed by strong governance, in-house collections, and a differentiated sourcing model, the company is well-positioned for sustainable value creation, it added. 

 

The brokerage maintained its 'Neutral' rating on the stock with a target price of ₹820 per share.