A) Overall Performance

HDB Financial Services Ltd. reported its standalone and consolidated audited financial results for the quarter and year ended March 31, 2025. The joint statutory auditors have issued an unmodified opinion, and the financials were prepared in compliance with Indian Accounting Standards (Ind AS).

B) Loan Book Growth

The company witnessed strong loan book expansion during the fiscal year:

• Loan Book as of March 31, 2025: ₹1,03, 343 Cr

• Loan Book as of March 31, 2024: ₹86, 721 Cr

• YoY Growth: ₹16,621 Cr

This 19.2% YoY increase reflects HDB’s continuing expansion in its lending business.

C) Revenue and Profitability

• Revenue from Operations:

• FY25: ₹16,300 Cr

• FY24: ₹14,171 Cr

• YoY Increase: ₹2129 Cr (+15%)

• Interest Income:

• FY25: ₹13,835 Cr

• FY24: ₹11,156 Cr

• YoY Increase: ₹2679 Cr (+24%)

• Profit After Tax (PAT):

• FY25: ₹2175 Cr

• FY24: ₹2460 Cr

• YoY Decline: ₹284 Cr (-11.6%)

While revenue growth remained robust, the decline in PAT is attributable to a sharp rise in provisioning costs.

D) Asset Quality and NPA Trends

• Gross Stage 3 Ratio (NPAs):

• FY25: 2.26%

• FY24: 1.90%

• Stage 3 Provision Coverage Ratio:

• FY25: 55.95%

• FY24: 66.82%

• Impairment on Financial Instruments:

• FY25: ₹2113 Cr

• FY24: ₹1067 Cr

• YoY Increase: ₹1045 Cr (+98%)

The data clearly indicates rising stress in the loan book. The increase in the Gross Stage 3 ratio, combined with a drop in provision coverage, signals a weakening asset quality position. The significant increase in impairment expenses has directly impacted net profitability.

E) Sectoral Risk Indicators

While the report does not identify a specific sector under stress, disclosures under the Resolution Framework for COVID-19 suggest that:

• Personal Loans and Corporate borrowers (including MSMEs) were most impacted.

• Several accounts previously classified as standard (as of September 2024) slipped into NPAs by March 2025.

This trend indicates that retail lending, particularly in the personal loan segment, continues to face pressure post-COVID, likely contributing to higher Stage 3 assets.

🤝 UnlistedZone View

HDB Financial Services showed healthy loan book and income growth in FY25, but rising NPAs and provisioning have dampened profitability. The decline in provision coverage is a key concern that will need to be addressed.

While growth remains strong, asset quality and risk management will be critical going forward, especially in the context of retail loan stress and potential macroeconomic headwinds.

Investors should closely monitor:

• Changes in provisioning strategy

• Trends in Stage 2 and Stage 3 assets

• Exposure to high-risk sectors (e.g., unsecured personal loans)

Conclusion: HDB’s FY25 performance highlights the classic NBFC trade-off: strong top-line growth versus the challenge of maintaining asset quality in an uncertain environment.

FY26 will be crucial to observe whether HDB can rein in its NPAs while sustaining growth momentum.