AI-generated · cited to primary sources · not investment advice
HDB FINANC SER (544429) Jan 2026 Filing Analysis
Does management do what it says?
Management successfully expanded NIMs to 7.9% in Q2FY26 from 7.7% in Q1FY26, attributing this to actions taken to reduce the cost of capital. (1 met, 2 exceeded across 3 tracked commitments)
“On the yield side, as I had mentioned in the last call, we expect the NIM to range generally in the 7.9 to 8. It is 8.09 currently... We expect again that to be range bound at least for the coming few quarters in the range of 5 to 10 bps, not a lot more variance from there.”
The cost-to-income ratio for the lending business significantly improved to 39.5% in Q3FY26, outperforming the target range of 41.5% to 42%. (3 exceeded, 1 missed, 1 met across 5 tracked commitments)
“In terms of 18% to 20%, the way we've always looked at it, Viral, is the nominal GDP plus 6 to 7. And overall, the thought process does not change. We believe growth will start kicking in from here on, and it should be in more positive range from where we stand today.”
While asset quality in unsecured SME has started easing, the book still saw a slight sequential reduction of 1%. Management expects growth to return in a couple of quarters. (1 in progress across 1 tracked commitment)
“Our overall objective over a period of time that we've quoted in the public domain that we would like to be more, you know, pushing towards ‘used’ to get to a 50-50 over the next 3 to 4 years does not change.”
The company anticipates further positive momentum in Asset Finance (CV and CE) driven by infrastructure push and rural economy improvement.
“We anticipate further positive momentum in both the businesses on the back of infrastructure push and improving rural economy.”
See the full cited Management analysis of HDB FINANC SER
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