Highlights: HDB Financial Services IPO fully subscribed on Day 2

One of the primary goals of the fresh issue in HDB Financial Services’ upcoming IPO is to strengthen the company’s Tier-I capital base. This capital infusion is crucial for supporting its future expansion plans, which include scaling up lending operations and growing its overall asset base. The move is aimed at ensuring long-term financial stability while enabling the company to capitalize on new growth opportunities in the lending space.

The upcoming IPO of HDB Financial Services will comprise two key components: a fresh issue of shares by the company and an Offer for Sale (OFS) by its promoter shareholder.

The fresh issue is aimed at raising new capital to support the company’s growth and operational plans. In contrast, the OFS will allow existing shareholders to offload a portion of their stake to the public, providing liquidity while broadening the company’s investor base.

HDB Financial Services has significantly broadened its reach across India, with a strong emphasis on smaller cities and towns.

As of September 2024, the company operates 1,772 branches across 1,162 cities and towns, spanning 31 states and union territories. This extensive network caters to over 17.5 million active customers.

Notably, HDB Financial Services prioritised semi-urban and rural markets, with nearly 80% of its branches located outside the country’s 20 largest cities.

HDFC Bank currently holds a 94.6% stake in HDB Financial Services. While the exact number of shares to be offered through the upcoming Offer for Sale (OFS) has not yet been disclosed, the Draft Red Herring Prospectus (DRHP) indicates that the bank plans to offload a significant portion of its holding. Following the public issue, HDFC Bank’s stake is expected to fall below 75%, aligning with SEBI’s minimum public shareholding requirements.

Over the past few years, HDB Financial Services has demonstrated steady growth, even amid volatile economic conditions. As of September 30, 2024, the company’s gross loan book stood at ₹98,620 crore, reflecting a compound annual growth rate (CAGR) of 21% since FY22. Its total assets under management (AUM) have reached ₹90,230 crore. In terms of profitability, the company reported a net profit of ₹2,460.8 crore for FY24, a significant increase from ₹1,620 crore in FY22.

The price band for the HDB Financial Services IPO is between Rs 700-740 per share. The issue is open from June 25 to June 27.

“At the upper end of the price band, HDB is valued at a price-to-earnings (P/E) ratio of 27.01x and a price-to-book (P/B) ratio of 3.72x. This places it above peers like L&T Finance and Mahindra Finance, and in line with Sundaram Finance and Cholamandalam, but below the premium commanded by Bajaj Finance,” said Gaurav Garg of Lemonn Markets Desk,” said Gaurav Garg, Research Analyst with Lemonn Markets.

“At the upper price band of Rs 740, HDB is available at a P/B ratio of 3.4x (FY25-post issue basis), which appears to be fairly priced compared to its peers. Given its diversified lending portfolio, strong parentage support, omnichannel distribution platform, granular lending model, customer expansion, asset quality, and better growth prospects, we recommend a ‘Subscribe’ rating on a long-term basis,” said Geojit Investments in an IPO note.

In the grey market, HDB Financial Services shares are currently trading at a premium of Rs 59 per share, indicating a potential listing price of around Rs 799, a 7.97% gain over the upper end of the price band set at Rs 740.

Earlier in the day, the grey market premium (GMP) had climbed close to Rs 74, suggesting a listing pop of nearly 10%. However, the premium has gradually declined.

It is important to note that the grey market is an informal and unregulated space, and the actual listing price may vary depending on broader market conditions.

The issue so far is subscribed just 0.21 times overall. According to exchange data, the retail investor portion saw a subscription of 0.21 times, while the Qualified Institutional Buyers (QIBs) segment saw no bids. The Non-Institutional Investor (NII) category, which includes high-net-worth individuals, was subscribed 0.34 times.

The IPO will remain open for subscription till June 27.

Also Read : HDFC Bank’s stake in HDB Financial post-IPO: What’s changing, what’s at risk, and why investors should know

As per the IPO note by SBI Securities, the company has been classified as an upper-layer NBFC by the Reserve Bank of India, placing it among the more closely regulated and systemically significant financial players. With a gross loan book that makes it the 4th largest diversified retail-focused NBFC in India as of March 2025, HDBFS has built a strong position in the financial ecosystem. Its Assets Under Management (AUM) stood at Rs 1,073 billion as of March 2025.

As per the brokerage report, “HDB offers a diversified portfolio of products through its 3 business verticals.” What further strengthens its presence is its unique “phygital” distribution model. “The company operates through an Omni-channel ‘phygital’ distribution model that combines a large network of branches, in-house tele-calling teams and various external distribution and channel partners,” SBI Securities notes.

Following the three-day bidding window that closes on June 27, the share allotment is expected to take place on June 30. HDB Financial is likely to make its stock market debut on Wednesday, July 2, with listings on both the BSE and NSE.

At the higher price band, the issue is valued at a P/BV of 3.4x (based on post-issue BVPS), which is in line with the peer average, making the issue appear fully priced. While the company has delivered steady growth in interest income driven by the expansion of its gross loan book, profitability has been impacted by interest rate volatility, leading to a decline in PAT for FY25.

“Although the company is well-positioned for long-term growth, supported by its strong brand and expanding customer base, considering the near-term operational challenges, we recommend a ‘Subscribe For Long Term’ rating for this issue,” said Choice Broking in an IPO note.

The Offer for Sale (OFS) involves HDFC Bank, the promoter of HDB, selling its stake worth up to Rs 10,000 crore. All proceeds from this portion will go directly to HDFC Bank after deducting taxes and relevant expenses. HDB Financial itself won’t receive any funds from the OFS. The IPO-related expenses will be shared between the company and HDFC Bank based on the number of shares they each contribute to the public offer. Since the size of the Fresh Issue exceeds Rs 100 crore, a monitoring agency and the Audit Committee will oversee how the funds are used, and any changes in allocation will need shareholder approval.

HDB Financial Services IPO includes both a Fresh Issue and an Offer for Sale, each with different objectives. According to the company’s filings, the money raised from the Fresh Issue estimated at up to Rs 2,500 crore will primarily be used to strengthen its Tier-I capital. This will help the NBFC meet future capital needs as its lending operations expand. A portion of the funds will also go towards covering the IPO expenses. As per regulatory norms, non-banking financial companies like HDB need to maintain a minimum capital base against their risk-weighted assets, making this capital raise essential.

When a company of HDB Financial’s scale hits the public markets, it does not do it alone. The much-anticipated IPO, pegged at Rs 12,500 crore, is backed by a heavyweight line-up of financial institutions acting as Book Running Lead Managers (BRLMs). From global giants to leading domestic players, the list includes BNP Paribas, JM Financial, BofA Securities India, Goldman Sachs India, HSBC, IIFL Capital, Jefferies, Morgan Stanley, Motilal Oswal, Nomura, Nuvama Wealth, and UBS Securities India.

Adding to it, MUFG Intime India popularly known as Link Intime has been appointed as the registrar for the issue, responsible for processing applications and allotment.

At the upper end of the price band, the IPO values the company at a price-to-book ratio of 3.7x for FY25, with a post-issue market cap of Rs 6,13,879.4 million. According to Anand Rathi’s IPO note, “They intend to further diversify their funding sources by expanding and strengthening their lender base, with the goal of optimizing leverage and reducing the average cost of borrowings.”

The report also highlighted that HDB’s strong parentage – HDFC Bank, India’s second-largest private lender along with a wide product base and disciplined lending approach, makes the offering attractive. “We consider the IPO fairly valued and recommend a ‘SUBSCRIBE’ rating,” the note concluded.

HDB Financial Services Rs 12,500 crore IPO has drawn attention from market watchers, and Deven Choksey Research has weighed in with a positive outlook. In its note on the issue, the brokerage highlights the company’s performance and future potential.

According to the report, HDB has delivered a compounded annual growth rate (CAGR) of 23.7% in assets under management (AUM) and 12.9% in pre-provisioning operating profit (PPoP) over FY23–FY25. While these numbers trail slightly behind peer averages—25.3% for AUM and 19.4% for PPoP.

The report noted, “We expect that its AUM and disbursement will witness higher growth compared to FY25, led by higher urban and rural consumer demand driven by government’s intervention in reducing income tax rates, RBI’s efficient inflation management and expected cuts in GST rates for the overall consumption basket.”

On valuation, Deven Choksey Research finds the IPO pricing reasonable. The issue is priced at 3.4x trailing twelve-month price-to-book (TTM P/B), compared to the peer average of 4.4x. As the report puts it, “We believe the issue is attractively priced considering its parentage, peer group ROA average and its growth potential.” Based on these factors, the brokerage has assigned a “SUBSCRIBE” rating.

HDB Financial Services, now in the spotlight for launching India’s largest NBFC IPO, has quietly grown into one of the major players in the non-banking space. As of March 31, 2024, it ranks as the seventh-largest retail-focused NBFC in the country, with a gross loan book of Rs 90,220 crore, according to data from CRISIL.

The company began its journey in 2007 as a subsidiary of HDFC Bank, India’s largest private sector lender by assets. As of March 2025, HDFC Bank’s total assets stood at Rs 39.1 lakh crore, with operations spanning retail and commercial banking, insurance, asset management, and broking.

As India’s largest NBFC IPO opens for subscription today, HDB Financial Services is seeing early interest in the grey market. The company’s shares are reportedly trading at a premium of Rs 74, suggesting a potential listing price of around Rs 814, about 10% above the upper end of the issue price band set at Rs 740.

While the grey market premium (GMP) often reflects investor sentiment, it is not an official indicator of listing performance. The actual listing price can vary depending on broader market trends, demand during the subscription window, and institutional investor response.

The Rs 12,500 crore IPO of HDB Financial Services, opening today, has taken the spot as the largest public issue of 2025 so far, surpassing Hexaware Technologies Rs 8,750 crore offer earlier this year. The issue includes a fresh fundraise of Rs 2,500 crore and an offer for sale (OFS) of Rs 10,000 crore by HDFC Bank, which currently owns 94.3% of the NBFC arm.

The IPO will remain open for three days, from Wednesday, June 25, to Friday, June 27. The price band has been fixed between Rs 700 and Rs 740 per share.

HDB Financial IPO opens today. A day before its Rs 12,500 crore IPO opens to the public, HDB Financial Services has raised Rs 3,369 crore through its anchor book. The company allotted 4.5 crore shares at the upper price band of Rs 740 per share to a total of 141 institutional investors. Some of the major anchor participants include LIC, ICICI Prudential Mutual Fund, and SBI Mutual Fund.

HDB Financial Services announced that it has filed its red herring prospectus with the Registrar of Companies, Gujarat, Dadra and Nagar Haveli at Ahmedabad on June 19. The upcoming IPO will comprise both a fresh issue of equity shares and an offer for sale (OFS). The company plans to raise Rs 2,500 crore through the fresh issue and Rs 10,000 crore via the OFS. HDFC Bank, which currently holds a 94.36% stake in HDB Financial Services, will be offloading part of its holding through the offer for sale, as part of the broader public listing strategy.

The highly anticipated HDB Financial Services IPO has garnered strong backing from a consortium of leading global and domestic investment banks. A total of 12 firms are acting as book running lead managers for the offering, underscoring the scale and significance of what is being touted as India’s biggest IPO in the NBFC space.

The book runners include BNP Paribas, JM Financial, BofA Securities India, Goldman Sachs (India) Securities, HSBC Securities & Capital Markets, IIFL Capital Services, Jefferies India, Morgan Stanley India Company, Motilal Oswal Investment Advisors, Nomura Financial Advisory and Securities (India), Nuvama Wealth Management, and UBS Securities India.

The responsibility of handling the share allotment process and investor-related services lies with MUFG Intime India (formerly known as Link Intime), which has been appointed as the registrar to the issue.

Backed by India’s largest private lender, HDFC Bank, the HDB Financial Services IPO is set to close for bidding on June 27, 2025. The allotment of shares is expected to be finalised on June 30, with the stock scheduled to be listed on both the BSE and NSE on a tentative date of July 2.

HDB Financial Services is all set to enter the primary market with its Rs 12,500 crore initial public offering (IPO) on June 25, marking one of the largest public issues in India’s non-banking financial company (NBFC) sector. According to the latest trends in the unofficial grey market, HDB shares are commanding a premium of Rs 80. This indicates a potential listing price of around Rs 820, suggesting an approximate 11% gain over the issue price. While the grey market premium (GMP) is not an official metric, it is often viewed as an early indicator of investor sentiment and market appetite ahead of the listing.

HDB Financial Services operates under a licensing agreement that allows the use of the HDFC brand name. Any changes or termination of this agreement could pose significant risks. As highlighted in the DRHP, the loss of rights to use the HDFC Bank logo, or any damage to the HDFC Bank brand’s reputation, could significantly impact HDB’s brand recognition and overall market perception

HDB Financial Services benefits significantly from the brand value and credibility of its parent, HDFC Bank, a relationship that serves as both a strength and a potential vulnerability. While the strong parentage lends trust and stability, it also comes with inherent risks.

While HDB Financial Services has managed to reduce its gross Stage 3 (non-performing) loans in recent years, concerns around asset quality remain. According to the Draft Red Herring Prospectus (DRHP), gross Stage 3 loans stood at 2.10%, 2.38%, 1.90%, 2.73%, and 4.99% of total gross loans across various reporting periods, indicating ongoing, though fluctuating, credit risk.

Significant exposure to unsecured loans: Approximately 29% of HDB Financial’s loan portfolio consists of unsecured loans. This increases the risk of borrower default. The company itself acknowledges the concern, stating, “Our unsecured loan portfolio is not supported by any collateral… we may be unable to collect the unpaid balance.”