A small shop owner needs ₹3 lakh to restock before the festive rush. A truck driver wants to finance a second commercial vehicle. A salaried person in a tier-2 town needs a personal loan, and the big private banks keep saying the file doesn't fit. These borrowers are the bread and butter of HDB Financial Services.

It's the lending arm of HDFC Bank, set up in 2007 and run out of Ahmedabad. The company lends across three buckets — Enterprise Lending to small businesses, Asset Finance for vehicles and equipment, and Consumer Finance for personal and consumer-durable loans. As of March 2026, it runs 1,730 branches across 1,161 cities and serves 17.5 million customers.

The money is made the old-fashioned NBFC way borrow cheap, lend at a higher rate, keep the spread. The average loan per customer is just ₹1.66 lakh, so the book is small-ticket and spread thin across lakhs of borrowers. It also earns fees from distributing insurance and doing back-office work for parent HDFC Bank. For the full subscription, GMP and listing story, read our complete HDB Financial Services IPO deep-dive.

Financial Snapshot

Revenue has climbed every year — roughly ₹12,400 crore in FY23, ₹14,171 crore in FY24, ₹16,300 crore in FY25, and ₹18,431 crore in FY26. That's steady mid-teens growth. Nothing wild, but reliable for a book this size.

Profit is where it gets interesting. PAT went ₹1,959 crore in FY23 to ₹2,461 crore in FY24 — and then it fell to ₹2,176 crore in FY25. Revenue rose that year, but profit dropped about 12%. The reason was higher provisioning as bad loans crept up in the retail book. That's the one number that bothers me. When a lender's profit falls while its topline grows, the problem is asset quality, not demand.

FY26 fixed a lot of that. PAT recovered 16.9% to a record ₹2,544 crore. Gross NPA improved to 2.44% by March 2026 from 2.81% in December 2025, and net interest margin pushed to 8.2% in the March quarter.

What impresses me is the funding. HDB carries CRISIL AAA and CARE AAA ratings on the back of its HDFC Bank parent, so it borrows cheaper than most standalone NBFCs — and that protects the margin directly. For a leveraged lender, cheap money is the whole game.

Strengths

• HDFC Bank parentage is a real funding edge. HDFC Bank owns 74.1% of the company, and that's the reason HDB carries a AAA rating from both CRISIL and CARE. The rating lets it raise debt cheaper than rival NBFCs, which feeds straight into a net interest margin of 8.2% in Q4 FY26.
• The loan book is genuinely granular. It serves 17.5 million customers with an average exposure of just ₹1.66 lakh each. A book spread this thin is far harder to blow up than one concentrated in a handful of large borrowers, which matters when stress hits the system.
• FY26 was a real turnaround year. Profit grew 16.9% to a record ₹2,544 crore, gross NPA improved to 2.44%, and 98.31% of new loans were sourced digitally. The asset-quality dip of FY25 looks like it has been arrested.
• Scale that can't be copied overnight. The gross loan book stood at ₹1,18,493 crore as of March 2026, run through 1,730 branches across 1,161 cities. That makes it the seventh-largest diversified NBFC in India, built over years of branch-laying a new entrant can't shortcut.

Risks

• IPO investors are underwater. The stock listed at ₹835 in July 2025 but now trades around ₹642 — roughly 13% below the ₹740 issue price. Anyone who applied and held has a loss, not a gain, almost a year later.
• FY25 is a warning you can't ignore. Profit fell from ₹2,461 crore to ₹2,176 crore even as revenue rose, because provisioning jumped on rising retail bad loans. If that NPA stress returns, FY26's recovery can reverse just as fast.
• This IPO was mostly an exit, not a fundraise. Of the ₹12,500 crore raised, ₹10,000 crore was HDFC Bank selling its own shares and only ₹2,500 crore was fresh capital into the business. When the parent offloads that much at the IPO price, it's fair to ask how much near-term upside they themselves saw.
• NPAs are still elevated and competition is heavy. GNPA at 2.44% is better than last year but high for a lender of this quality, and HDB fights Bajaj Finance and other large NBFCs for the same borrowers. Part of FY26's margin gain also came from RBI rate cuts lowering borrowing costs — an external tailwind that can fade.

Should You Buy, Hold, or Sell?

The IPO window closed in June 2025. This is now a call on the stock at around ₹642.

Conservative investors — hold if you already own it, but I wouldn't buy fresh yet. The business is solid and AAA-rated, but the stock has only drifted lower since listing and there's no clear trigger to push it up right now.

Moderate investors — accumulating slowly makes sense. At roughly ₹642 you're paying about 21 times earnings and 2.5 times book for a lender showing a genuine FY26 recovery. A staggered buy with a 2-3 year view is reasonable.

Aggressive investors — wait for one or two more clean quarters confirming the NPA improvement holds. If asset quality stays clean and PAT keeps growing, a re-rating is on the table.

Honest take: good company, weak stock so far the patient investor probably gets paid here, just not quickly.

IPO Objects of the Issue

Contact Details

HDB Financial Services Ltd. Radhika, 2nd Floor, Law Garden Road, Navrangpura, Ahmedabad – 380009, Gujarat 📧 dipti.khandelwal@hdbfs.com 🌐 www.hdbfs.com

IPO Registrar — MUFG Intime India Pvt. Ltd. (formerly Link Intime India Pvt. Ltd.) 📞 +91 810 811 4949 📧 hdbfinancial.ipo@linkintime.co.in 🌐 www.in.mpms.mufg.com

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