HDFC Securities FY26 Results Out: PAT Falls 17% to ₹929 Cr — What It Means for Unlisted Share Investors

HDFC Securities Limited just reported its audited FY26 results. Here is everything an unlisted share investor needs to know — from the numbers, to the valuation, to where the stock goes from here.

HDFC Securities Limited, the stock broking and financial distribution subsidiary of HDFC Bank, just released its Audited Standalone and Consolidated Financial Results for the year ended 31 March 2026. The results were approved by the Board of Directors at its meeting held on April 13, 2026, and submitted to NSE under Regulation 52(1)(2) of SEBI (LODR) Regulations, 2015. Statutory auditors S.R. Batliboi & Co. LLP have issued an unqualified (clean) audit opinion on both standalone and consolidated statements.

The headline numbers reflect the cyclical reality facing the entire Indian capital markets and broking industry — strong underlying fundamentals but a meaningful earnings dip driven by SEBI's derivatives regulations and softer trading volumes.

Let us break it all down.

Q4 FY26 Standalone Snapshot (Quarter ended March 31, 2026 — Audited):

• Revenue from Operations: ₹850 crore

• Profit Before Tax: ₹353 crore

• PAT: ₹268 crore

• Basic EPS: ₹150.26

The Q4 PAT of ₹268 crore is actually the highest quarterly profit in FY26, showing a sequential recovery from ₹219 crore in Q3 (Dec 2025). This is an important signal that the worst of the earnings compression may be behind the company.

The income statement tells a nuanced story. This is not a business in structural decline — it is a business navigating a cyclical regulatory reset.

1. Interest Income surges, Fees & Commission fall

The two biggest revenue lines moved in opposite directions this year:

• Interest Income: Grew from ₹1,418 crore in FY25 to ₹1,498 crore in FY26 (+5.6%), reflecting the rapid scaling of the Margin Trading Facility (MTF) and lending book.

• Fees and Commission Income: Fell sharply from ₹1,744 crore in FY25 to ₹1,516 crore in FY26 (-13.1%), directly reflecting the impact of SEBI's F&O regulations, lower trading volumes, and the "true-to-label" norms.

This divergence is telling. HDFC Securities is becoming a more lending-oriented, less brokerage-dependent business — a structural shift that has been accelerating across the industry.

2. Net Gain on Fair Value Changes turns negative

Net gains on fair value changes swung from ₹844 crore in FY25 to ₹701 crore in FY26. While still positive, this compression added to overall revenue pressure.

3. Finance Costs jump 4%

Finance costs rose from ₹785 crore in FY25 to ₹817 crore in FY26, driven by the sharply larger commercial paper (CP) book used to fund the MTF lending business.

4. Employee Costs rise meaningfully

Employee benefit expenses grew from ₹480 crore in FY25 to ₹575 crore in FY26 (+19.8%), partly due to a ₹103.7 crore provision towards past service cost on gratuity — a one-time impact from the new Labour Codes notified by the Ministry of Labour and Employment in November 2025.

The most striking development in the FY26 balance sheet is the massive expansion of the lending book, which has transformed the company's asset base.

• Total Assets: Jumped from ₹14,031 crore to ₹21,784 crore — a 55% increase in a single year.

• Loans (MTF/lending book): Rose from ₹5,512 crore to ₹7,133 crore (+29.4%).

• Bank Balance (other than cash): Surged from ₹4,862 crore to ₹7,839 crore — likely reflecting client margin and settlement obligations alongside liquid investments.

• Debt Securities (Commercial Papers): Nearly doubled from ₹7,742 crore to ₹12,931 crore.

• Borrowings (other than debt securities): Jumped from ₹202 crore to ₹2,183 crore.

• Debt-to-Equity Ratio: Rose sharply to 4.20x from 2.37x in FY25.

During FY26, the company issued commercial papers totalling ₹52,440 crore and redeemed ₹47,202 crore. The outstanding CP book as of 31 March 2026 includes instruments maturing through June 2026, with rates ranging from 7.25% to 7.90% — reflecting the current interest rate environment.

This leverage expansion is a strategic bet on India's growing margin trading and securities lending market. But it also introduces refinancing and rate risk that investors should monitor.D) Cash Flow: Operating Cash Burns, Financing Boom

The cash flow statement reveals an important dynamic:

• Operating Cash Flow: Net outflow of ₹(3,053) crore in FY26, versus an inflow of ₹2,381 crore in FY25. The massive ₹(2,976) crore increase in "Other Bank Balances" (client-related margin/settlement funds) and the ₹(1,621) crore increase in loans are the primary drivers of this swing.

• Investing Cash Flow: Net outflow of ₹(1,674) crore, mainly on account of investment purchases.

• Financing Cash Flow: Inflow of ₹5,679 crore, driven by net new CP issuances of ₹7,217 crore.

Net cash and cash equivalents increased by ₹953 crore, ending the year at ₹1,784 crore versus ₹831 crore at the start of the year.

The FY23–FY25 run was exceptional — driven by a bull market, retail investor boom, and explosive F&O volumes. FY26 marks the first year of a cyclical correction, but the company remains highly profitable by any standard. A 30% net margin business generating ₹929 crore of PAT is far from distressed.

The critical question for investors is whether FY26 is the trough or whether FY27 sees further pressure. The Q4 FY26 sequential PAT recovery (₹268 crore vs ₹219 crore in Q3) is an early positive signal.

Understanding why this business will likely recover requires understanding what makes it structurally resilient.

HDFC Bank Parentage: HDFC Securities is not an independent fintech startup — it is the broking arm of India's largest private sector bank. This gives it access to HDFC Bank's enormous retail customer base for cross-selling, institutional trust and brand credibility, and low-cost funding for its lending book.

Multi-Revenue Architecture:

1. Brokerage and trading commissions — cyclical but recovering

2. Interest income from MTF and loans — structural and growing

3. Distribution income — mutual funds, insurance, bonds — stable trail commissions

4. Rental income from investment property — small but recurring

This diversification means a single regulatory shock (like the F&O crackdown) cannot knock out the entire top line, unlike pure-play discount brokers.

GIFT City Subsidiary: HDFC Securities IFSC Limited, incorporated in October 2024 in GIFT City, adds a new dimension — access to international investors and offshore capital market flows. This is still nascent but optionality for the future.

ESOPs and Talent: During FY26, the company allotted 1,02,140 equity shares to employees under ESOP schemes and has 6,02,704 stock options outstanding — signalling a motivated, equity-aligned workforce.

HDFC Securities' FY26 earnings decline did not happen in isolation. The entire cohort of Indian capital market businesses — brokers, exchanges, depositories, wealth managers — has been through a painful period.

SEBI's October 2024 F&O Regulations: Starting October 1, 2024, SEBI implemented a multi-pronged crackdown on retail derivatives trading:

• Reduced the number of weekly index options expiry dates to one per exchange per week — eliminating the lucrative "expiry-day" trading volumes that brokers depended on

• Raised minimum F&O contract sizes

• Tightened margin requirements

• Mandated "true-to-label" fee structures: brokers must now pass on exact exchange charges to clients, eliminating the spread they previously retained

The rationale was SEBI's own finding that over 93% of retail F&O traders lost money in the three years between FY22 and FY24. The regulator concluded that the retail-F&O boom was creating systemic risk and household wealth destruction.

1. The Volume Impact Was Immediate: Average daily equity derivatives turnover on NSE fell by approximately 27% between September 2024 and March 2025. Cash market turnover fell ~19% in the same period. These are not small numbers — they directly translate to lower brokerage and transaction fees.

2. Listed Broker Earnings Collapsed: The pain was visible in listed brokers' reported numbers. Angel One — India's largest listed retail broker — reported a 50% year-on-year PAT fall to ₹212 crore in Q2 FY26, with revenue down 21% and client acquisition down 42%. Across the industry, firms like 5paisa, IIFL Capital, and Motilal Oswal also reported profit declines of 35–61%.

3. Securities Transaction Tax Increase: Budget changes also raised the STT on F&O, adding to cost pressures for high-frequency retail traders and further dampening volumes.

4. Market Correction: The broader equity market itself corrected from its September 2024 peaks, with the Nifty 50 falling meaningfully through late 2024 and early 2025. Lower markets mean fewer IPOs, lower equity trading activity, and lower mutual fund commissions — a triple whammy.

5. The good news: Market conditions appear to be stabilising, and SEBI's regulatory intent has now been largely priced in. Volumes in Q4 FY26 showed sequential improvement, which is why HDFC Securities' Q4 PAT recovered strongly.

Since HDFC Securities is not listed on any stock exchange, its shares trade in the pre-IPO unlisted market through platforms such as UnlistedZone.

Current Unlisted Market Data (April 2026):

• Current Price: ₹9,000 per share

• 52-Week High: ₹11,250

• 52-Week Low: ₹9,000 (current price = 52-week low — reflecting maximum pessimism)

• Total Shares Outstanding: ~1.777 crore shares

• Market Capitalisation (Unlisted): ~₹15,995 crore

• P/E Ratio (on FY26 PAT of ~₹930 crore): ~17.2x

• P/B Ratio: ~4.76x

• ROE: ~33.6%

• Book Value per Share: ~₹1,889

The current price sitting exactly at its 52-week low is worth noting. It reflects the maximum pessimism baked into the stock after the FY26 earnings disappointment. With the Q4 results now public showing sequential PAT recovery, the floor may be in place.

Implied Valuation Math: At ₹9,000 per share and 1.777 crore shares, the market cap is ~₹15,995 crore. Against FY26 PAT of ₹929–930 crore, the trailing P/E is approximately 17.2x. If the company recovers toward ₹1,100 crore PAT in FY27 (near FY25 levels), the forward P/E drops to approximately 14.5x — making the current price look reasonably attractive for a long-term unlisted investment.

With the fresh FY26 numbers in hand, here is how HDFC Securities stacks up against its two closest listed peers.

• Market Cap: ~₹25,595 crore (April 13, 2026)

• FY26(E) Revenue: ~₹4,733 crore | FY26(E) PAT: ~₹769 crore

• Trailing P/E: ~34x

• P/B: ~4.4x

Angel One is larger by revenue but trades at nearly double the P/E multiple of HDFC Securities' unlisted valuation. This premium reflects its listed status (liquidity premium), larger active client base, and recovery expectations. However, Angel One's business is far more dependent on F&O volumes — making its earnings more cyclically exposed than HDFC Securities. The 50% PAT fall in Q2 FY26 is a stark illustration.

• Market Cap: ~₹1,30,804 crore (April 2026)

• IPO Price: ₹100 per share (November 2025) — IPO market cap ~₹61,736 crore

• Current Price: ~₹203 per share (post-listing appreciation of 60%+)

• P/E: ~70x FY26 Expected earnings

• ROE: ~49%

• Balance Sheet: Near debt-free

Groww is the outlier — a digital-first platform that listed at a massive premium and has continued to trade at technology multiples. Its market cap of ₹1.3 lakh crore dwarfs HDFC Securities despite broadly similar ROE profiles. The Groww premium is justified by its superior growth CAGR (~85% revenue CAGR FY23–FY25), near debt-free status, and dominant market share among new-age retail investors. But it also trades at multiples that leave little room for earnings disappointment.

1. No IPO Timeline: HDFC Securities has not announced any listing plans. Without a listing catalyst, the path to realising the valuation gap with listed peers is uncertain and could take years.

2. Regulatory Overhang: Further SEBI tightening of F&O, MTF, or distribution commissions remains a real risk. SEBI has been on an active regulatory drive and there is no certainty it stops here.

3. Rising Leverage: The debt-to-equity ratio of 4.20x is elevated. A credit market tightening, a rise in short-term interest rates, or any restriction on CP issuances could force the company to shrink its lending book quickly.

4. Unlisted Market Illiquidity: Unlike buying Angel One or Groww on NSE, buying HDFC Securities unlisted shares means accepting that exits can take time, bid-ask spreads are wide, and pricing is opaque.

5. Parent Dependency: HDFC Securities' moat is partly its HDFC Bank parentage. Any change in strategic priority at the parent level — e.g., HDFC Bank deciding to compete with or absorb the broking business — could impact the standalone entity.

Today's FY26 results from HDFC Securities confirm what was largely expected — a tough year for India's broking industry, with PAT down 17% to ₹929 crore and revenue slightly below FY25 levels. But within the results lies an important positive: Q4 FY26 was the best quarter of the year by PAT (₹268 crore), suggesting the cycle may be turning.

For holders of HDFC Securities unlisted shares, the numbers validate the thesis that this is a cyclical dip in a structurally sound business — not a permanent impairment. The current unlisted price of ₹9,000 (sitting at its 52-week low) and a trailing P/E of ~17x against a listed peer valuation of 35–70x suggests the market has more than adequately priced in the bad news.

For prospective buyers considering entering the unlisted market, the FY26 results provide a clean base for forward earnings estimates and make the risk-reward arguably more favourable today than it was when the stock was at ₹11,250.

The watchlist items are clear: monitor SEBI's regulatory stance on F&O and MTF, track the CP book refinancing, and watch for any hint of a listing announcement from HDFC Bank — which would be the single biggest re-rating catalyst.

Disclaimer: This article is for educational and informational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investing in unlisted shares involves significant risks including illiquidity, price volatility, and potential loss of capital. All figures are sourced from the company's audited financial results filed on April 13, 2026. Please consult a SEBI-registered investment adviser before making any investment decisions.