HDB Financial Services, the non-banking financial arm of HDFC Bank, reported a Q3 loss due to rising NPAs, prompting analysts to suggest a possible delay in the company's listing plans.
Mumbai: HDB Financial Services, a subsidiary of HDFC Bank, experienced a challenging third quarter, reflecting the continued impact of the Covid-19 pandemic on its financial performance. The company posted a loss for the quarter as its proforma gross non-performing assets (NPAs) increased significantly.
Specifically, proforma gross bad loans rose nearly a percentage point to 5.9% in the three months ending December, compared to 5.1% in September and 2.9% in December 2019. This surge in NPAs indicates increased stress on the company's loan book. The reported figures take into account the Supreme Court's interim stay on the classification of bad loans.
Despite the challenges, HDB Financial Services increased its liquidity buffers, with the liquidity coverage ratio reaching a healthy 285.5%. This move aims to ensure the company can meet its short-term obligations even in adverse conditions.
Siddharth Purohit, an analyst at SMC Institutional Equities, commented on the company's performance, stating, "Looking at the numbers and performance, I think the management will have to defer any listing plans now." This statement suggests that the current financial situation may impact the timing of any potential initial public offering (IPO) plans for HDB Financial Services.
The company's performance is being closely watched, especially by investors interested in the unlisted shares of HDB Financial Services. The surge in NPAs raises concerns about asset quality and profitability, potentially impacting the valuation of the company's shares.
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