HDB Financial Services reported mixed third-quarter results that led to contrasting market reactions, with the company posting strong profit growth while facing concerns over loan growth momentum and asset quality metrics. The financial services subsidiary of HDFC Bank delivered a significant jump in profitability, though brokerage firms expressed caution about near-term prospects.

Financial Performance Overview

The company's Q3 performance showed robust profitability improvements alongside steady operational metrics:

Profitability and Margin Expansion

HDB Financial Services achieved a remarkable 36% year-on-year increase in net profit to ₹644.00 crore for the quarter ended December 31, compared to ₹472.00 crore in the corresponding period last year. Net interest income surged 22% to ₹2,285.00 crore, supported by easing pressure on funding costs. The company's net interest margins expanded by 14 basis points quarter-on-quarter, while credit costs improved by 20 basis points sequentially to 2.50%.

Asset Quality and Growth Concerns

Despite stable asset quality metrics, some performance indicators raised concerns among analysts:

Loan growth decelerated to 12.20% from 13% in the previous quarter, falling short of management's stated aspiration of 18-20% compound annual growth rate over the next three to five years. Disbursements grew by only 10% year-on-year, reflecting challenges in the asset finance and enterprise lending segments.

Brokerage Reactions and Market Response

The mixed quarterly performance prompted varied responses from research firms. Motilal Oswal maintained its 'Neutral' rating with a price target of ₹815.00, citing that current valuations already factor in medium-term growth potential. The brokerage emphasized the need for clearer evidence of stronger loan growth execution and structural improvements in return ratios.

Emkay Global took a more cautious stance, downgrading the stock to 'Reduce' from 'Buy' and cutting its price target by 12% to ₹750.00 from ₹850.00. The firm trimmed its estimated assets under management growth by 2-4% and marginally raised credit cost assumptions, resulting in a 5-6% reduction in earnings per share estimates. Emkay highlighted near-term downside risks from potential stress in vehicle finance and unsecured lending segments.

Shares of HDB Financial Services closed 0.37% lower at ₹764.75, reflecting investor concerns about the company's growth trajectory despite strong profitability metrics.

HDB Financial Services Limited has submitted its quarterly compliance filing to stock exchanges, confirming adherence to its stated IPO fund utilization plans for the quarter ended December 31, 2025. The filing, submitted under Regulation 32 of SEBI Listing Obligations and Disclosure Requirements Regulations, 2015, demonstrates the company's commitment to transparent fund management practices.

IPO Details and Listing Information

The company successfully raised funds through its Initial Public Offering and commenced trading on major Indian stock exchanges in 2025. The equity shares were listed on both National Stock Exchange of India Limited and BSE Limited with effect from July 2, 2025.

Compliance and Fund Utilization Status

The quarterly statement filed by Company Secretary and Compliance Officer Dipti Jayesh Khandelwal confirms complete adherence to the original fund utilization plan. The company reported no deviation or variation in the use of funds raised through the public issue for the reporting quarter.

Regulatory Oversight and Monitoring

CARE Ratings Limited continues to serve as the monitoring agency for the IPO proceeds utilization, ensuring proper oversight of fund deployment. The regulatory framework requires listed companies to file quarterly statements confirming adherence to their stated fund utilization objectives, promoting transparency and accountability in capital market operations.

Corporate Governance Framework

The filing demonstrates HDB Financial Services' commitment to maintaining high standards of corporate governance and regulatory compliance. The company's audit committee and external auditors have both reviewed the fund utilization and provided nil comments, indicating satisfactory adherence to the planned fund deployment strategy.

The statement confirms that there were no changes in the terms of contracts or objects for which funds were raised, and no shareholder approval was required for any modifications during the quarter ended December 31, 2025.