HDB Financial Services: A Major IPO Launch
HDB Financial Services has made headlines by raising an impressive ₹3,369 crore from anchor investors ahead of its initial public offering (IPO), which opens today and will close on June 27. The company allocated 4.55 crore shares at ₹740 apiece, marking the upper end of the price band. This significant capital infusion sets the stage for what could be a landmark event in the Indian financial services sector.
Anchor Investor Participation
Among the notable participants in this anchor investment round is India’s largest insurer, the Life Insurance Corporation of India (LIC), which secured a substantial allocation of 6.53% of the anchor portion, valued at approximately ₹220 crore. The company also distributed 1.93 crore shares to 22 domestic mutual funds through 65 schemes, accounting for 42% of the anchor book. Key players in this segment included ICICI Prudential, SBI Mutual Fund, Kotak Mahindra AMC, Axis Mutual Fund, Aditya Birla Sun Life, Motilal Oswal, and HSBC Mutual Fund.
In addition to domestic investors, major global players such as BlackRock, Goldman Sachs, Baillie Gifford Pacific Fund, Government Pension Fund Global, Templeton, and the Abu Dhabi Investment Authority (ADIA) also participated, underscoring the strong interest in HDB Financial Services.
IPO Details
The IPO comprises a fresh issue of ₹2,500 crore and an offer for sale (OFS) of ₹10,000 crore by HDFC Bank, which currently holds a 95.5% stake in HDB Financial. The price band is set between ₹700 and ₹740 per share, with a grey market premium (GMP) of around ₹74, indicating a 10% premium ahead of the issue. At the upper price band, the valuation of the company stands at 3.7 times the FY25 post-issue book value, which analysts consider reasonable given HDB Financial’s robust performance and the backing of HDFC Bank.
Strong Financials and Business Presence
HDB Financial Services is one of India’s leading non-banking financial companies (NBFCs), boasting a loan book of ₹1.06 lakh crore as of March 31, 2025. The company reported a net profit of ₹2,176 crore for FY25, a significant increase from ₹1,359 crore the previous year. Its asset quality remains healthy, with gross non-performing assets (GNPA) at 2.49% and net NPA at 1.38%.
With a pan-India presence, HDB Financial operates over 1,700 branches across 1,200 cities and towns, serving more than 1.9 crore customers. Its diverse offerings include secured and unsecured personal loans, gold loans, and lending to small and medium enterprises (SMEs).
Analyst Recommendations
At the upper end of the price band, the IPO values HDB Financial at a post-issue price-to-book value of 3.7 times FY25 estimates. Analysts have responded positively, with brokerage houses like SBI Securities, Ventura Securities, and Anand Rathi issuing ‘Subscribe’ calls. They cite strong fundamentals, stable asset quality, and promising long-term growth prospects as key reasons for their recommendations.
Ventura Securities noted, “We believe the IPO is fairly priced given the company’s improving profitability, robust risk management, and capital adequacy.” Anand Rathi emphasized the opportunity to invest in a high-quality, retail-focused NBFC that benefits from HDFC Bank’s extensive reach and reputation.
Use of Proceeds and Listing Plans
The proceeds from the fresh issue will be utilized to bolster HDB Financial’s capital base and support future lending activities. The OFS component will benefit the selling shareholder, HDFC Bank, which will see its stake significantly reduced post-IPO, aligning with regulatory norms.
The company is expected to list on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in the first week of July, marking a significant milestone in its growth trajectory.
Conclusion
HDB Financial Services is poised for a transformative IPO that not only reflects its strong financial standing but also the confidence of both domestic and international investors. With a solid business model, robust asset quality, and the backing of HDFC Bank, the company is well-positioned for future growth. Investors keen on tapping into the burgeoning Indian financial services sector should keep a close eye on this IPO as it unfolds.