HDB Financial Services: A Promising Stock Market Debut
HDB Financial Services, a subsidiary of HDFC Bank, is making its much-anticipated stock market debut on Dalal Street today, July 2. This non-banking financial company (NBFC) has generated considerable buzz, as indicated by its grey market premium (GMP), which suggests a potential listing gain of approximately 10% over its issue price. As of the latest data, the GMP stands at Rs 72-75 per share, reflecting strong investor interest.
IPO Details
The initial public offering (IPO) of HDB Financial Services took place from June 25 to June 27, with shares priced between Rs 700-740 each. Investors had the option to purchase shares in lots of 20, making the offering accessible to a broad range of participants. The IPO successfully raised a substantial Rs 12,500 crore, comprising a fresh issue of shares worth Rs 2,500 crore and an offer-for-sale (OFS) component of Rs 10,000 crore, primarily led by HDFC Bank Ltd.
Strong Investor Response
The IPO attracted an impressive response, with approximately 46.7 lakh applications resulting in bids worth Rs 1.32 lakh crore. The overall subscription rate reached 16.69 times across various categories, showcasing robust demand.
Mahesh Ojha, AVP-Research at Hensex Securities, emphasized the long-term potential of the stock, advising investors to hold it for a longer duration. He also suggested that those who did not receive allotments should consider entering around the IPO price if market conditions become volatile.
Market Insights
Post-listing, retail investors are advised to wait for price stabilization and closely monitor the stock’s performance over the first 3-6 months. Harshal Dasani, Business Head at INVasset PMS, recommended that retail investors should only consider entering once the stock shows signs of consistent growth, particularly in light of India’s expanding credit market projected to grow significantly over the next five years.
The qualified institutional buyers (QIBs) category saw a staggering subscription rate of 55.47 times, with bids amounting to Rs 1,31,696.50 crore. Non-institutional investors (NIIs) also demonstrated strong interest, subscribing 9.99 times, while the retail portion was subscribed 1.41 times. The employees’ category experienced a subscription rate of 5.72 times, and the shareholders’ section was oversubscribed 4.26 times.
Growth Potential
HDB Financial Services is strategically positioned to capitalize on India’s burgeoning credit market, with lending expected to grow at an annual rate of 13-15%, reaching Rs 297 lakh crore by FY28. Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, highlighted the company’s strong digital onboarding capabilities and focus on under-banked markets as key advantages for long-term growth.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, echoed this sentiment, recommending the stock for long-term holding due to its favorable positioning within the retail and SME financing segments. He advised those who did not receive allotments to consider accumulating shares during any post-listing corrections, particularly in the face of broader market volatility.
Company Overview
Established in 2007 and headquartered in Ahmedabad, HDB Financial Services focuses on retail financial solutions. The company operates through three primary business verticals: enterprise lending, asset finance, and consumer finance. Additionally, it provides business process outsourcing (BPO) services to its parent company, HDFC Bank.
IPO Management
The IPO was managed by a consortium of leading financial institutions, including JM Financial, Bofa Securities India, BNP Paribas, Goldman Sachs (India), HSBC Securities & Capital Markets, IIFL Capital, Jefferies India, Morgan Stanley India, Motilal Oswal Investment, Nomura Financial Advisory, Nuvama Wealth, and UBS Securities India. MUFG Intime India (Link Intime) acted as the registrar, while Trilegal served as the advisor for the issue.
Conclusion
HDB Financial Services presents a compelling investment opportunity, particularly for those with a long-term horizon. With its strategic positioning in a growing credit market and strong investor interest, the stock is poised for potential growth. However, as with any investment, it is crucial for investors to conduct thorough research and consult with financial advisors before making decisions.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.