Two HDFC Group stocks deliver strong returns in 2025; Will HDB Financial follow suit after listing?

The HDFC Group, one of the largest conglomerates in the Indian BFSI space, has recently seen improved performance in two of its key listed entities—HDFC Bank and HDFC Life. While HDFC Bank has been regaining investor confidence post its merger with HDFC Ltd., HDFC Life continues to expand its market share in India’s evolving life insurance sector. Both companies are riding a combination of internal improvements and external tailwinds, positioning themselves favourably in the BFSI space.

HDFC Bank: operational stability and value unlocking

After periods of muted performance post the HDFC Ltd merger, HDFC Bank has shown improved market interest in 2025, supported by steady financials and broader strategic moves.

FY25 results show steady growth

HDFC Bank reported standalone interest income of ₹3,00,517 crore for FY25. Full-year profit after tax (PAT) stood at ₹67,347 crore, up 10.7% YoY. The bank also declared earnings per share of ₹92.8 for FY25. These figures place it among the better-performing private sector banks in terms of core profitability.

Asset quality remains stable

Gross NPAs declined to 1.33% (from 1.42% as on Dec '24), and net NPAs stood at 0.43%, supported by a diversified loan book and prudent provisioning. This stability has contributed to improved investor confidence.

HDB Financial Services IPO

HDB Financial Services IPO, a subsidiary NBFC, is being viewed as a value unlocking event. The IPO includes a fresh issue of ₹2,500 crore and an OFS component of ₹10,000 crore. The public offer was subscribed 17.65 times, with the retail portion booked 1.51 times.

Rural penetration

The bank expanded its footprint to 9,455 branches and over 21,000 ATMs across 4,150 cities. Notably, 51% of branches are in semi-urban and rural areas, aligning with its strategy to deepen financial inclusion and expand low-cost deposit mobilisation.

HDFC Bank stock revival

After underperforming broader indices in previous years. HDFC Bank has gained attention from investors because of its lower valuation. For instance, HDFC Bank currently trades at a PE of 21.82, which is lower than private sector peers such as Yes Bank, IndusInd Bank and Kotak Mahindra Bank, offering a relatively attractive valuation.

So far this year, HDFC Bank has delivered a strong return of 13.6% to its investors. The stock has given a positive return in the last five months and recently crossed the ₹2,000 per share mark as well as hit a 52-week high of ₹2,027.10. The current market cap of ₹15.44 lakh crore.

HDFC Life: Steady execution despite regulatory shifts

HDFC Life stock has moved up more gradually, its performance metrics indicate a resilient and growing business, especially in the context of sector-level reforms.

Premium and profit growth in FY25

For FY25, individual weighted received premium (WRP) grew by 17% to ₹13,364 crore, outpacing the industry’s 10% growth. Standalone net profit increased nearly 15% YoY to ₹1,802 crore. The company's market share rose to 11.1% in the overall sector and 15.7% in the private segment.

However, new business margins slightly declined to 25.6% (from 26.3% YoY) due to changes in surrender value norms and a higher mix of unit-linked products. Despite this, the value of new business (VNB) rose by 13% to ₹3,962 crore.

Diversified distribution network

The company continues to strengthen distribution through 650+ branches, 2.4 lakh agents, and 300+ corporate partners. Agency channel share has grown from 14% in FY22 to 18% in FY25. HDFC Life also added 40 new bank partnerships during the year.

Structural reforms in the insurance sector

The life insurance sector is seeing regulatory changes such as the adoption of Risk-Based Capital norms and IFRS standards, which aim to bring consistency, transparency, and stronger solvency norms. These reforms are expected to support long-term growth and capital adequacy.

Tier 2/3 market growth and digital initiatives

Over 65% of the company’s business came from tier 2 and 3 cities, contributing to policy volume growth. Technology platforms, such as the company’s INSPIRE initiative, are enhancing digital enablement and improving customer engagement.

Strong growth in 2025

HDFC Life shares have risen over 30% so far this year. Last week, the stock hit a 52-week high of ₹811.20 per share, while its market cap stood at ₹1.73 lakh crore.

Can HDB Financial deliver stellar gains post-listing?

Amid a robust performance by the HDFC group companies. Investors now turn their eye towards another group company, HDB Financial Services. After a robust IPO subscription, investors await the IPO listing, which will take place on July 2.

As reported by Livemint, HDB Financial IPO grey market premium (GMP) is at a premium of ₹52 to ₹57 per share. This implies a potential gain of between 7% and 8% at the upper end of the price band.

Grey market premium (GMP) is a rough indicator of how IPO stock could debut on the listing day. Although grey market trading is not approved by the stock exchanges and SEBI, many investors track GMP before IPO shares are listed on the exchanges. It is important to note that market sentiments and volatility on the listing day can impact the stock’s listing.