HDB Financial Services Ltd (HDBFS) Q2 FY27 Results Analysis: PAT Jumps 34.2%, AUM Growth Trails Guidance

HDB Financial Services Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 5,005.30 Cr (+10.12% YoY) and PAT growth of +34.19% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

HDBFS grew PAT 34.2% YoY to Rs 780.2 Cr on NII spread expansion (56.41% to 58.24%), a 195 bps YoY cost-to-income reduction, and 2.5% lower impairment, with the lending segment EBIT margin up 395 bps to 22.13%. Growth trails both guidance and industry: lending assets expanded ~11.4% annualised against the 18-20% AUM CAGR target and NBFC industry credit growth of 15.8%, while cost-to-income at 44.37% sits above the 41.5-42% band. GS3 at 2.43% is below the year-ago 2.81% despite a sequential uptick from 2.34%, and CAR stands at 21.37%.

Key Investment Insights

Key Positives

• PAT grew 34.2% YoY to Rs 780.2 Cr; EPS Rs 9.39 vs Rs 7.01
• NII grew 15.56% YoY to Rs 2,533.7 Cr; NII/interest income spread widened from 56.41% to 58.24%
• PPOP grew 15.88% YoY to Rs 1,773.6 Cr; PPOP margin up 176 bps YoY to 35.43%
• Cost-to-income improved 195 bps YoY to 44.37%; opex declined 1.24% QoQ
• Lending segment result grew 35.6% YoY with EBIT margin up 395 bps YoY to 22.13%
• GS3 improved to 2.43% from 2.81% YoY; credit cost of ~2.43% annualised in line with management's ~2.3% guidance
• CAR at 21.37%; debt/equity improved to 4.94x from 5.03x; interim dividend of Rs 2.00 per share declared

Risk Factors

• Lending assets grew ~11.4% annualised, well short of the 18-20% AUM CAGR guidance; lending revenue +11.43% YoY vs industry NBFC credit +15.8%
• Cost-to-income at 44.37% remains 237 bps above the guided 41.5-42% band
• GS3 rose to 2.43% from 2.34% QoQ; impairment rose 4.71% QoQ
• BPO revenue fell 7.2% YoY with segment margin compressing from 8.99% to 6.02% and segment result down 37.9%
• Finance costs rose 7.27% YoY and 3.64% QoQ on rollovers at a higher rate base
• Revenue growth of 10.1% YoY was the slowest among the three quarters shown