Uncertainty surrounding the stake sale and potential IPO also added to the downward pressure on HDB.
“HDB Financial shares are down almost 50% from the peak of ₹1,200 reached in early 2020; this is largely due to lagging financial performance and regulatory overhang,” said Rahul Thalia , director of Sarffin Financial Advisors. “The shares had also risen on expectations that an IPO was in sight, but the proposed merger also cast doubt on those plans.”
HDB Financial Services is a 100% subsidiary of, the latter holding 95% of the company’s capital. HDB Fin offers a wide range of loans and asset financing products to individuals, emerging companies and micro-enterprises.
HDFC Bank is seeking greater regulatory clarity over its ownership stake in HDB Fin as it plans to merge with its parent company HDFC.
“We believe that the RBI may have reservations about approving the proposed merger structure with non-lending businesses under the bank, as it will challenge its long-standing position to close banks and avoid regulatory overlap. “, said Anand Dama, principal analyst,
. “Allowing NBFCs – HDB Fin/HDFC Credila – as subsidiaries of a bank could also be difficult given the RBI’s insistence on undertaking lending activities primarily under the bank.”
For the quarter ended March 31, 2022, HDB’s net revenue was ₹2,141.4 crore compared to ₹1,985.3 crore for the quarter ended March 31, 2021, a growth of 7.9%.
Profit after tax for the quarter was ₹427.1 crore compared to ₹511.8 crore a year ago.
Stage 3 loans represented 4.99% of gross loans. HDB Financial’s gross restructured pool was below 60 basis points, of which 13% slipped in NPAs. One basis point equals 0.01%.