The uncertainty over stake sale and potential IPO has also added to the downward pressure on HDB.
“The shares of HDB Financial have fallen nearly 50% from the peak of ₹1,200 hit in the early half of 2020; this is largely due to the lagging financial performance and the regulatory overhang,” said Rahul Thalia, director, Sarffin Financial Advisors. “The shares had also risen due to expectations that an IPO was in the offing but the proposed merger has also cast a doubt over those plans.”
HDB Financial Services is a fully owned subsidiary of with the latter holding 95% stake in the company. HDB Fin offers a wide range of loans and asset finance products to individuals, emerging businesses and micro enterprises.
HDFC Bank is seeking greater regulatory clarity on holding its stake in HDB Fin as it looks to merge with parent HDFC.
“We believe the RBI may have reservations in approving the proposed merger structure with non-lending businesses under the bank as it will challenge its long-standing stance to ring-fence banks and avoid regulatory overlap,” said Anand Dama, senior analyst,
. “Allowing NBFCs – HDB Fin/HDFC Credila – as subsidiaries under a bank could also be difficult given the RBI’s insistence to undertake lending business primarily under the bank.”
For the quarter ended March 31, 2022, HDB’s net revenue was at ₹2,141.4 crore as against ₹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 in the year-ago period.
Stage 3 loans were at 4.99% of gross loans. HDB Financial’s gross restructured pool was less than 60 basis points of which 13% slipped into NPAs. One basis point is 0.01%.
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