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Informist, Monday, Oct. 13, 2025

 

By J. Navya Sruthi

 

MUMBAI – HDB Financial Services Ltd.'s Jul-Sept net profit is likely to rise due to higher net interest margin. The company is expected to see strong growth of assets under management, lower operating expenses and a likely fall in credit costs, analysts said.

 

HDB Financial Services is expected to report a net profit of INR 6.22 billion for the reporting quarter, up over 5% on year, according to the average of estimates from four brokerages. The estimates for net profit range from INR 5.67 billion to INR 6.77 billion. Sequentially, the net profit is seen growing 9.5%.  

 

Nirmal Bang Equities Pvt Ltd. has the highest estimate for net profit at INR 6.77 billion, up 15% on year and JM Financial Institutional Services Pvt. Ltd. expects a 10.3% on year rise to INR 6.52 billion. HDB Financial Services had reported a net profit of INR 5.91 billion in the year-ago quarter.  

 

"Margins are expected to improve, leading to strong NII (net interest income) growth," JM Financial said in a report. Nirmal Bang Equities expects the non-banking finance company to report positive bottom line growth on the back of strong growth of assets under management and lower operating expenses along with a fall in credit costs.

 

According to JM Financial, the HDFC Bank subsidiary company's assets under management as on Sept. 30 are estimated at INR 1.13 trillion, up nearly 14% on year and 3% on quarter. The company had assets of INR 1.07 trillion under management on Mar. 31.

 

However, a few analysts expect a sharp fall in the bottom line due to higher credit costs. Motilal Oswal has the lowest estimate for the net profit at INR 5.67 billion, down 4% on year. Equirus Securities sees the net profit falling slightly on year to INR 5.90 billion.

 

Motilal Oswal expects credit costs to increase 10 basis points on quarter to 2.6%. In the year-ago quarter the company's credit cost was 1.8%. "We expect disbursements to decline 1% YoY (on year) and expect loan growth of 13% (on year)," it added.

 

The company's net interest income for the reporting quarter is expected at INR 27.71 billion, down 31% on year but up over 32% on quarter, according to the average of the four estimates. The lowest estimate for net sales is INR 20.30 billion from Nirmal Bang while the highest estimate of INR 40.57 billion is from JM Financial.

 

The non-banking finance company is in the retail financing space and its lending profile mainly encompasses credit to underbanked customers in Tier III and below towns or areas. It has a diversified loan book of 73:27 mix of secured and unsecured businesses.

 

Enterprise lending accounts for 39.3%, which is the major part of the company's assets under management. This is followed by asset finance, primarily comprising commercial vehicles, construction equipment, and tractor financing, which account for 38.0% of the assets under management. Consumer finance accounts for 22.7% of the total assets under management.

 

Of the two brokerage reports on the company available with Informist, one has a "buy" recommendation with an average target price of INR 900 while the other has a "hold" on the stock. The company will report its earnings for the September quarter Wednesday.

 

Monday, shares of the company ended slightly up at INR 739.85 on the National Stock Exchange. The stock is down over 12% since the company announced its June quarter earnings. HDB Financial Services had reported a net profit of INR 5.68 billion for the June quarter, down 2.4% on year. The company's total revenue for that quarter was INR 44.65 billion, up 15% on year.

 

The following are the Jul-Sept earnings estimates for HDB Financial Services from four brokerages in descending order of the estimate of net profit in INR million:

 

Broking firm	Net Profit (in INR million)	Net Interest Income (in INR million)	EBITDA
Nirmal Bang Equities Pvt Ltd	6,769	20,297	N.A
JM Financial Institutional Securities Pvt Ltd	6,524	40,566	N.A
Equirus Securities Pvt Ltd	5,898	28,460	N.A
Motilal Oswal Financial Services Ltd	5,671	21,531	14,543
Average	6,215.50	27,713.50	14,543

 

End

 

Edited by Deepshikha Bhardwaj

 

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