HDFC Bank’s non-banking financial company (NBFC) arm, HDB Financial Q4 FY25 results signals a gradual recovery after a turbulent Q3, marred by rising provisions and Stage 3 asset stress. However, annual comparisons highlight a sharp deceleration in profitability, even as customer growth and asset book expansion continue ahead of its proposed IPO.
The numbers paint a picture of a company in transition — balancing growth and risk management, while preparing to tap public markets in one of the most awaited NBFC listings of the year.
HDB Financial Q4 FY25 Results
Performance Comparison: Q4 FY24 → Q4 FY25
| Metric | Q4 FY24 | Q4 FY25 | Change (YoY) |
|---|---|---|---|
| Loan Book | 90,200 | 1,06,900 | +18.5% |
| Net Profit | 660 | 530 | -19.7% |
| EPS (INR) | 8.3 | 6.7 | -19.3% |
| Return on Assets (RoA) | 3.0% | 2.0% | -100 bps |
| Return on Equity (RoE) | 19.6% | 13.6% | -600 bps |
| Net Interest Margin (NIM) | 7.6% | 7.6% | No change |
| Gross Stage 3 Assets | 1.90% | 2.26% | +36 bps |
| Customer Base (Crore) | 1.55 | 1.92 | +24% |
| Branches | 1,682 | 1,771 | +89 |
| Cities/Towns | 1,144 | 1,170 | +26 |
| Book Value per Share (INR) | 173.3 | 198.8 | +14.7% |
| Capital Adequacy Ratio (CAR) | 19.2% | 19.2% | Flat |
Analysis:
While the loan book continued its upward trajectory, the profitability metrics have significantly weakened YoY, driven by higher credit costs and a normalization in post-pandemic tailwinds. Gross Stage 3 asset quality deteriorated moderately, reflecting sector-wide stress in unsecured and enterprise lending. The company has opened 89 new branches in FY25 and the company’s customer base also increased by 24%.
HDB Financial Services Q4 FY25 Vs. Q3 FY25
| Metric | Q3 FY25 | Q4 FY25 | Change (QoQ) |
|---|---|---|---|
| Loan Book | 1,02,000 | 1,06,900 | +4.7% |
| Net Profit | 488 | 530 | +8.6% |
| Gross Stage 3 Assets | 2.25% | 2.26% | Flat |
| Net Interest Margin (NIM) | 7.5% | 7.6% | Slight improvement |
| Customers (Crore) | 1.84 | 1.92 | +.08 |
| Branches | 1,792 | 1,771 | -21 |
| Cities/Towns | 1,168 | 1,170 | +2 |
| Disbursement Growth (%) | +3.7 | +8.4 | Accelerated |
| Key Drivers | Asset/Consumer Finance | Asset/Enterprise Lending | — |
Analysis:
HDB delivered a sequential net profit growth of 8.6%, recovering from Q3’s slump, which was driven by higher credit provisioning. With improving disbursement and marginally better NIM, the fourth quarter indicates a modest operational rebound, even as gross Stage 3 assets remain high. Number of branches also decreased by 21. However, the company has onboarded 8 lakh new customers.
HDB is Preparing for IPO
In October 2024, HDB filed its Draft Red Herring Prospectus (DRHP) with SEBI for a INR 12,500 crore IPO, split between:
- INR 2,500 crore fresh equity issuance (growth capital)
- INR 10,000 crore offer for sale by promoter HDFC Bank
This is not merely a fundraising exercise — it’s a regulatory necessity. Under RBI’s scale-based regulatory framework, upper-layer NBFCs must list by September 2025.
Despite the recent decline in RoE and profits, HDB continues to be a key asset for HDFC Bank, which holds a 94.32% stake (slightly down from 94.64% in FY24). Post-IPO, the bank is expected to retain a significant controlling interest.
Key Takeaways
- Revenue growth is intact, but profitability is under pressure due to asset quality stress and macro buffers.
- Stage 3 asset ratio remains elevated, although it has plateaued sequentially.
- Disbursements are rebounding, led by commercial lending, which bodes well for FY26.
- IPO momentum continues, despite short-term profitability pressures.
- Operational footprint is strong, with a deep retail and MSME presence across 1,170 cities.
Final Words: In A Recalibration Phase
HDB Financial is entering FY26 in a strategic reset mode — balancing growth with risk management. While HDB Financial services Q4 FY25 recorded moderate earnings, its broad distribution, rising book value, and strong parentage offer long-term comfort. Investors eyeing the IPO will want to see sustained earnings normalization and stable asset quality in the coming quarters.
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