HDB Financial shares jump 5% on Q1 profit cheer. What are Nomura, Motilal Oswal saying?
Shares of HDB Financial Services jumped 4.5% to Rs 786 on the BSE on Thursday after the non-banking financial company reported a strong set of
Shares of HDB Financial Services jumped 4.5% to Rs 786 on the BSE on Thursday after the non-banking financial company reported a strong set of June quarter earnings, with profit rising 38% year-on-year, driven by higher net interest income and improved asset quality.The company reported a profit after tax of Rs 785 crore for Q1FY27, compared with Rs 568 crore in the corresponding quarter last year. Net interest income (NII) increased 20% year-on-year to Rs 2,509 crore from Rs 2,092 crore, while net total income rose 17% to Rs 3,185 crore from Rs 2,726 crore.Pre-provisioning operating profit grew 25% year-on-year to Rs 1,752 crore from Rs 1,402 crore a year ago. Profit before tax climbed 44% to Rs 1,055 crore, compared with Rs 733 crore in the year-ago quarter.The company's assets under management (AUM) stood at Rs 1.22 lakh crore as of June 2026, up 11% from Rs 1.09 lakh crore a year earlier.
Its gross loan book also expanded 11% year-on-year to Rs 1.21 lakh crore from Rs 1.09 lakh crore as of June 2025, reflecting steady growth in its lending business.Also Read | Protection business boosts HDFC Life, ICICI Pru Life Q1 earningsWhat are experts saying after HDB Financial Q1Motilal Oswal has maintained a Neutral rating on HDB Financial Services with a target price of Rs 810, implying an upside potential of 8%. The brokerage said the company delivered a steady June quarter, with earnings coming in slightly ahead of its estimates. Asset quality continued to improve despite the seasonally weaker first quarter, keeping credit costs broadly stable. It also highlighted an expansion in net interest margins (NIM), supported by better portfolio yields. While loan growth was marginally below expectations, the brokerage noted that the management remains confident of a meaningful acceleration in the coming quarters, aided by strategic initiatives undertaken over the past few quarters and continued improvement in asset quality.Nomura has reiterated its Neutral rating on HDB Financial Services with a target price of Rs 790, indicating an upside potential of 5.1%.
The brokerage noted that the management expects the cost of funds to remain rangebound through the second quarter of FY27, similar to its guidance in the previous quarter, although it remains cautious about the second half of the fiscal given the uncertain global environment. Nomura also said the healthy growth in the consumer finance portfolio has supported an expansion in yields, a trend it expects to continue through FY27.Also Read | HDFC AMC Q1 Results: Net profit rises 12% to Rs 837 crore, revenue up 14%The company delivered healthy growth across its key operating metrics during the quarter. Net interest income grew at a faster pace than the loan book, while pre-provisioning operating profit outpaced overall income growth. This helped profit before tax register a 44% year-on-year increase despite a slight rise in provisioning.Investors are also likely to track the company's asset quality trajectory following its market debut, as loan growth, margins, credit costs and the performance of stressed assets remain key factors in the valuation of lending businesses.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own.
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