HDB Financial Services Q1 result: Net interest income up by 18.3% in the quarter
By Ankur Chandra | Updated at: Jul 16, 2025 05:39 PM IST
HDB Financial Services’ revenue from operations in June quarter increased year-on-year by 14.98% to Rs 4,465.4 crore. On a quarter – on- quarter basis, this increase is of 4.7%. Net profit in the June quarter declined year-on-year by 2.40% to Rs 567.7 crore. This decline was mainly due to deferred tax payments in the quarter. Increase in financing costs and increase in employee expenses also contributed to this decline. On a quarter-on-quarter basis net profit increased by 6.93%.
Net interest income rises
Net interest income of the company in the quarter increased by 18.3% Y-o-Y to Rs 670 crore. On a Q-o-Q basis this increase was of 6%. Net interest income is the difference between the interest that the company earned from its borrowers and the interest that it paid to its lenders. The interest rate cuts by RBI have benefitted the company.
Net interest margin of the company also improved in the June quarter. It increased to 7.7% from 7.6% in the corresponding period of the previous year. The company was also able to improve its efficiency in the quarter. Its cost-to-income ratio in the quarter came down to 42.7% from 43.21% in the June quarter of the previous year. On quarter -on- quarter basis it came down from 42.9% in the March quarter.
Gross NPA at 2.56%; net NPA at 1.11%
Gross stage 3 loans of the company at the end of June 2025 quarter stood at 2.56% of the total gross loans outstanding. Gross stage 3 loans are loans on which payments due are outstanding for more than 90 days. Provisioning coverage for these Gross 3 loans was at 56.70%. Net NPA of the company in the quarter was 1.11%.
Total gross loans given by the company increased year-on-year by 14.3% to Rs 1.09 lakh crore at the end of June quarter. On a quarter-on-quarter basis this increase was of 2.3%.
ROE in the quarter at 13.16%
Annualized Return on Assets (RoA) after adjusting for the recent offer for sale (OFS) stood at 2.02% . Annualized Return on Equity of HDB Financial Services in June quarter was 13.16%. Earnings per share stood at Rs 7.1. Book value per share at the end of quarter was Rs 225.4.
The stock is currently trading at around Rs 815 (as at 3:15 p.m. IST, 16th July, 2025). This makes it a price-to-book value ratio of 3.61. If the EPS for the June quarter is maintained for the next 3 quarters of FY26, then the 12 month forward Price-to-Earnings ratio at which the stock is currently trading is 29.10.
HDB Financial Services three main businesses are enterprise lending, asset finance and consumer finance. Interest rate cuts by the central back are expected to continue in the near term. This may reduce its cost of raising funds. This in turn may give a further boost to its profitability.
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Source: https://www.hdbfs.com/sites/default/files/debt/Unaudited-Financial-Results-under-Regulation-33-and-52-of-SEBI-(LODR)-for-quarter-ended-June-30-2025.pdf
