HDB Financial Shares Jump 12% After Q4 Results, Profit Rises 41%

Shares of HDB Financial Services surged as much as 12.4% to ₹724 on the BSE on Thursday after the company reported a strong set of Q4 FY26 results, led by a sharp rise in profitability.

The NBFC reported a 41% year-on-year (YoY) jump in profit after tax (PAT) to ₹751 crore, compared with ₹531 crore in the same quarter last year, driven by robust operating performance and lower credit costs.

Net interest income (NII) rose 22% YoY to ₹2,399 crore, while pre-provision operating profit increased 27% to ₹1,696 crore. Profit before tax surged 44% to ₹1,011 crore, reflecting strong income growth and operating leverage.

Margins also improved, with net interest margin (NIM) rising to 8.2% from 7.6% a year ago and 8.1% in the previous quarter. Return on average assets (RoA) improved to 2.5% on an annualised basis, compared to 2% in the year-ago period.

Provisions and loan losses increased to ₹685 crore from ₹634 crore, but overall profitability remained firm, supported by higher income.

Fundraising Plan, Balance Sheet Growth

Alongside the results, the company's board approved a fundraising plan of ₹32,825 crore through debt. This includes refinancing of ₹31,975 crore and fresh borrowing of ₹850 crore, to be raised via issuance of debt securities in one or more tranches.

The company also declared a final dividend of ₹2 per share for FY26.

For the full year, net profit rose 17% to ₹2,544 crore, while assets under management (AUM) grew 11% to ₹1.18 lakh crore. The gross loan book also expanded 11% to ₹1.18 lakh crore.

The loan mix remained stable, with enterprise lending and asset finance contributing 38% each, and consumer finance accounting for 24%. Secured loans formed 74% of the portfolio, reflecting a relatively cautious lending strategy.

Despite the recent rally, the stock remains under pressure over the medium term, declining 12% over the past six months and about 15% year-to-date.

Brokerages Mixed on Growth Outlook

Brokerages remained broadly constructive on the earnings performance, though views differed on future growth trajectory.

Nomura maintained a 'Neutral' rating with a target price of ₹740, noting that asset quality concerns appear to be largely behind the company and focus is now shifting towards growth. It highlighted that the profit beat was aided by lower credit costs and operating expenses, while improvement in cost of funds could support margins in the near term. However, it flagged geopolitical risks, including the West Asia conflict, as a key concern.

Jefferies took a more positive stance, reiterating a 'Buy' rating with a target price of ₹845. It pointed to strong profit growth driven by lower provisions and a 14 basis points sequential expansion in margins, supported by reduced funding costs.

Both brokerages noted that loan growth remained relatively moderate, with AUM rising around 11% YoY. While Nomura expects gradual improvement, Jefferies highlighted a pickup in disbursements and expects stronger growth ahead, along with lower costs and earnings CAGR of around 22% through FY28.