HDB Financial Services Ltd (HDBFS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day and welcome to the Q2 FY27 earnings conference call hosted by HDB Financial Services. Please note this conference call is only for analyst and investors and not for media. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Vishal Patel, Head Investor Relations of HDB Financial Services. Thank you and over to you.
Vishal Patel (HDB Financial Services): Thank you, Yashashvi. Good evening and I welcome you all to the 2Q earnings call of HDB Financial Services. We have with us Mr. G. Ramesh, MD and CEO, Mr. Jaykumar Shah, CFO and the senior management team of the company. I hope all of you would have had a chance to peruse our financial results, investor presentation, and press release which were filed with the stock exchanges earlier today and also available on our website. We will start with the management remarks and then open up the call for Q&A. The audio recording of this call will be available on our website shortly after the call ends. I now request our MD and CEO, Mr. G. Ramesh for his opening remarks, following which our CFO, Mr. Jaykumar Shah will provide a brief on the financial results before we open up the call for Q&A.
G. Ramesh (HDB Financial Services): Thank you Vishal and a very good evening to all of you who have joined in today. Starting with the macros, Indian economy remained resilient despite global headwinds. Real GDP growth projections have been revised to 7.1% for FY27 as highlighted by RBI in its monetary policy. On the monetary policy front, there has been a you know change in stance to calibrated tightening and increase in repo rate by 25 basis points on October 7, 2026. While sentiments around global uncertainty and deficient monsoon have had some impact, the outlook for H2 is positive with upcoming festive season and continuing momentum in domestic economic activity. However, the impact of uneven spatial distribution of monsoon
G. Ramesh (HDB Financial Services): and Gold Loans. Q2 disbursements for the segment grew by 25.5% year-on-year. Disbursements for LAP and Enterprise business, which is our mortgage book, grew by 30% year-on-year, and we anticipate this upward trajectory to continue. Our gold loan disbursements grew over 60%, 6-0%, year-on-year. Gold loan is positioned for continued traction in the coming quarters. Our unsecured business loans business returned to sequential growth trajectory this quarter. We expect momentum to continue in unsecured business loans going forward as well. Portfolio quality and collections were stable for enterprise lending. On asset finance, our commercial vehicle book registered a moderate growth of 8% YoY, while our construction equipment book grew by 12% in the same period. Festive season demand led by increasing last-mile volume, post-monsoon pick-up in construction activity, and stable fleet utilization levels, all augur well for asset finance business as we enter H2 with confidence. We did notice some seasonality effect in our asset quality in asset finance in line with our expectations. We expect this to normalize in the coming months. Consumer finance. Disbursements for consumer finance vertical grew over 25% YoY, while the book expanded 22% YoY. Consumer durables book, which consists of loans for purchase of consumer durables and digital products, that book grew by 49% YoY, and the auto loan book grew by 22% YoY. Our relationship PL, which is our cross-sell product to our customers, grew by 16% YoY. Portfolio quality and collections were stable for the consumer finance vertical. So, the festive season is expected to be a big fillip for this business. Overall, in Q2, our disbursements continued on growth trajectory, growing by 18% YoY. Our profit after tax grew 34% YoY. Conversations with our channel and OEM partners indicate strong confidence on the back of festive demand, and we look forward to a strong H2. On the technology front, we spoke to you all about our AI journey, Shikhar. Glad to share some updates in terms of the outcomes we're seeing in some of our focus areas. So, we've begun a project on AI-led customer onboarding, which basically reduces the time it takes to onboard a customer. And that has started for our consumer finance business, and we expect benefits to build as we build and roll out that project to the larger ecosystem. Collections in early buckets has worked out well. Over one in five calls of tele-calling that we make on early buckets is now through a AI-powered bot. We'll continue to update you on our technology implementation. With that, wishing everyone a very happy festive season ahead. I will now hand over to Jaykumar, our CFO, for an update on the financials.
Jaykumar Shah (HDB Financial Services): Thank you, Ramesh, and thank you all for tuning in. Moving on to the financial performance for the quarter, customer franchise grew to 24.8 million with an increase of 18.4% year-on-year. Disbursements for the quarter ended September 30, 2026 was 18,522 crores, up 18.7% year-on-year. Gross loan book as at September 30, 2026, stood at 124,469 crores, growing 11.7% year-on-year and 2.2% sequentially. Secured loans comprised of 73.9% of the gross loan book. Profit after tax for the quarter ended September 30, 2026, was 780 crores, an increase of 34% year-on-year. Gross Stage 3, which is the same as GNPA for us, as at September 30, 2026, stood at 2.43% as against 2.81% as at September 30, 2025, and 2.34% as at June 30, 2026, while the PCR was at 55%. Net interest income for the quarter was 2,534 crores, an increase of 15.6% year-on-year. NIM for Q2 FY '27 was at 8.23% versus 7.95% in Q2 FY '26 and 8.35% for Q1 FY '27. Cost-to-income ratio for our lending business was 39.3% in Q2 FY '27 as compared to 40.7
Jaykumar Shah (HDB Financial Services): 15.9% year-on-year and 1.7% quarter-on-quarter. Credit cost for the quarter was 2.37% as against 2.32% for the prior quarter. ROA annualized for the quarter ended September 30, 2026, stood at 2.42%. ROE for the quarter ended September 20, 30, 2026, stood at 14.4%. Earnings per share for the quarter was 9.4 rupees, and book value per share stood at 266.7. Our borrowing mix remains well diversified and a positive cumulative mismatch across all buckets up to 5 years. We remain well capitalized with the top, total capital adequacy of 21.37% as at September 30, 2026. In addition to the above, the board of directors have declared an interim dividend of rupees 2 per equity share with a record date of October 23, 2026. We can, we're now open for Q&A.
Jaykumar Shah (HDB Financial Services): Thank you very much.
Vishal Patel (HDB Financial Services): You can open the line, huh.
Moderator: Yes. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Renish from ICICI Securities. Please go ahead.
Renish (ICICI Securities): Yeah, hi. Am I audible?
Jaykumar Shah (HDB Financial Services): Yes, Renish.
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