HDB Financial Services Limited, a leading non-banking financial company (NBFC) promoted by HDFC Bank, launched its Initial Public Offering (IPO) on June 25, 2025. The issue, one of the largest this financial year, aims to raise a total of ₹12,500 crore, comprising a fresh issue of ₹2,500 crore and an offer for sale (OFS) worth ₹10,000 crore.

The price band is fixed between ₹700 and ₹740 per share, with a market capitalization of ₹61,387.93 crore at the upper end. The lot size for retail investors is 20 shares, requiring a minimum application amount of ₹14,800. For High-Net-Worth Individuals (HNIs), the minimum investment stands at 14 lots (280 shares), equivalent to ₹2,07,200.

The IPO will close on June 27, 2025, with allotment expected on June 30, and listing scheduled tentatively for July 2, 2025, on BSE and NSE.

About HDB Financial Services

HDB Financial Services is an upper-layer NBFC as categorized by the Reserve Bank of India (RBI). The company provides a wide range of retail-focused lending products, including enterprise lending, asset finance, and consumer finance. It serves a diverse customer base through a robust omni-channel distribution network.

The company’s loan book is among the largest in India’s NBFC segment, as per the CRISIL Report, underlining its market leadership.

IPO Structure and Managers

The issue includes:

• Fresh Issue: 3.37 crore shares worth ₹2,500 crore

• Offer for Sale (OFS): 13.51 crore shares worth ₹10,000 crore

Promoter HDFC Bank will be selling part of its stake through the OFS route.

A large consortium of book running lead managers (BRLMs) is managing the IPO, including:

• JM Financial Limited

• IIFL Securities Limited

• Nuvama Wealth Management Limited

• BNP Paribas

• BofA Securities India Limited

• Goldman Sachs (India) Securities

• HSBC Securities & Capital Markets

• Jefferies India

• Morgan Stanley India

• Motilal Oswal Investment Advisors

• Nomura Financial Advisory

• UBS Securities India

MUFG Intime India Private Limited is the registrar to the issue.

Anchor Investment and GMP Trend

On June 24, 2025, HDB Financial Services raised ₹3,368.99 crore from Anchor Investors, allotting 4.55 crore equity shares at ₹740 per share.

However, the Grey Market Premium (GMP) for HDB Financial Services remains at ₹0, suggesting no premium or discount expectations on listing. This indicates neutral sentiment in the unofficial market, raising questions about listing gains potential.

IPO Subscription Status

As of 11:00 AM on June 25, 2025, the IPO was subscribed 0.09 times, showing a slow start. Subscription traction from Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs) will be crucial in the coming days.

Financial Performance Snapshot

HDB Financial Services has reported strong financials over the last three fiscal years:

The financials show growth in revenue and operational profit, although net profit dipped in FY25, possibly due to elevated credit costs or provisioning.

Valuation and Key Ratios

• Pre-issue EPS (FY24): ₹27.32

• Post-issue EPS (FY24): ₹26.23

• Pre-issue P/E ratio: 27.08x

• Post-issue P/E ratio: 28.21x

• Industry average P/E: 23x

• ROAE (FY24): 14.72%

• RoNW: 14.72%

The valuations are above industry average, making the issue fully priced, as per analysts. While the fundamentals are strong, valuation premium limits upside potential, especially for listing gains.

Objectives of the Issue

The proceeds from the Fresh Issue will be used for:

1. Augmenting Tier-I Capital base, to support:

   • Future capital requirements

   • Business expansion across enterprise lending, asset finance, and consumer finance

The Offer for Sale proceeds will go to selling shareholders, primarily the promoter HDFC Bank.

Risks and Concerns

1. Fully Priced Valuation: High P/E multiple compared to peers may limit post-listing upside.

2. Muted GMP: Flat GMP suggests weak grey market interest.

3. Competitive Landscape: Faces intense competition from banks and other NBFCs.

4. Rising Interest Rates: Could impact borrowing costs and net interest margins.

5. Economic Slowdown: A cyclical downturn may impair loan repayments, leading to higher NPAs.

Analyst Recommendation

Despite solid fundamentals, strong financial history, and backing from HDFC Bank, most analysts recommend caution for investors looking for short-term gains.

The IPO is fairly valued to expensive, and the lack of listing-day GMP suggests limited listing pop. For long-term investors, the company’s scale, risk management, and brand association offer a compelling case.

However, short-term investors seeking quick gains may consider avoiding the issue or waiting for post-listing clarity.

Disclaimer

This article is for informational purposes only and should not be considered as financial advice. Investments in the securities market are subject to market risks. Please consult a qualified financial advisor before investing. The performance of the IPO or stock post-listing is subject to several factors, including market sentiment, institutional demand, and macroeconomic indicators.

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