By Kshipra Petkar
HDB Financial Services, the NBFC arm of HDFC Bank, made a blockbuster debut at the bourses on Wednesday. The firm’s share, which was priced at Rs 740, listed at a premium of 12.84% at Rs 835 – the best listing for an initial public offering (IPO) of over Rs 10,000 crore since Covid-19. The stock closed at Rs 840 – higher by 13.6% — with a market capitalisation of Rs 69,758.27 crore.
“Our issue of Rs 12,500 crores happens to be the largest IPO by an NBFC till date,” Ramesh G, managing director and chief executive officer of HDB Financial Services said at the listing ceremony. “We want to reiterate that we are committed to uphold the highest standard of corporate governance and will continuously strive to enhance stakeholder value,” he added. The IPO had received over bids worth Rs 1.61 lakh crore and was subscribed by around 17 times.
At the same event, HDFC Bank Managing Director and Chief Executive Officer Sashidhar Jagdishan said that the bank would continue to support its subsidiary post-listing. He added that the IPO would provide independent capital and visibility to the company and will help accelerate its growth trajectory, pursue new opportunities and solidify its position in the market.
Since Covid-19, there have seven IPOs of over Rs 10,000, with the Hyundai Motor India being the biggest at Rs 27,859 crore. Out of these seven, four IPOs listed at a discount, which includes, Hyundai Motors, LIC, One97 Communications and SBI Cards and Payment Services. The other two – Swiggy and NTPC Green Energy – listed with single-digit gains.
Emkay Global has initiated coverage on company and has assigned a ‘BUY’ rating, with a target price of Rs 900, it said in a report. “Overall, the diversified product mix and continued focus on the overlooked segments should support steady, 20% asset under management compounding to Rs 1.8 lakh crore over FY25-28E. Plus, better cost of borrowings and moderated credit costs should drive the RoA to 2.7% (mid-level of FY24 and FY25 RoA) by FY28E,” the report said.
However, it said that the key risk would be the Reserve Bank of India’s draft guidelines in October which demanded no overlap in business between the bank and its subsidiary. “If this is adopted, then HDFC Bank might have to reduce its ownership in HDBFS to under 20% within a specified duration,” the report said.