HDB Financial Services Ltd. launched its initial public offering (IPO) on Wednesday, June 25, to raise Rs 12,500 crore from the primary market. The much-anticipated IPO of the HDFC Bank subsidiary opened to a muted response across categories.
The mainboard issue was overall booked 31% till 3:50 p.m., as per the NSE data. The Non-Institutional Investors (NIIs) category was subscribed only 57%, while the retail segment was booked 28%. The employees’ quota was fully booked.
Amid the lukewarm demand for the mainboard IPO, the grey market premium has seen a significant fluctuation.
As the HDB Financial Services IPO opened for subscription, its grey market premium (GMP) witnessed a sharp decline of Rs 17 per share compared to the previous day.
HDB Financial Services Ltd., a leading non-banking financial company (NBFC), operates as a subsidiary of HDFC Bank. Post the IPO, HDFC Bank’s shareholding in its NBFC arm will decline from 94% to 74%.
The price band for the issue has been set between Rs 700 and Rs 740 per share.
HDB Financial Services IPO Latest GMP Today
The grey market premium (GMP) for HDB Financial Services IPO saw a downward trend on the first day of subscription. According to data from InvestorGain, the GMP stood at Rs 57 at 2:28 p.m.
The latest GMP suggests an estimated listing price of Rs 797 apiece, compared to the upper price band of Rs 740 apiece. This indicates listing of shares at a premium of 7.7% over the issue price.
Earlier, at 10:32 a.m. on Wednesday, the GMP stood at Rs 71 per share, indicating a listing price of Rs 811 apiece at a premium of 9.59% over the upper limit of the IPO price band.
Ahead of the launch of the IPO, the GMP stood at Rs 66 apiece on June 23, indicating a potential listing gain of 8.92% per share. The GMP increased to Rs 74 apiece on June 24, reflecting a premium of 10% over the issue price. However, the latest GMP indicates a sharp drop of Rs 17 per share, compared to the previous day.
Note: GMP is not an official source of data and is based on speculation.
HDB Financial Services IPO Key Details
HDB Financial Services IPO comprises a fresh issue of 3.38 crore equity shares, amounting to Rs 2,500 crore. The offer-for-sale (OFS) portion includes 13.51 crore shares, worth Rs 10,000 crore.
Retail investors can take part in the IPO by applying for a minimum lot size of 20 shares, which will require an investment of Rs 14,800. Small Non-Institutional Investors (sNIIs) must bid for at least 14 lots, or 280 shares, needing an investment of Rs 2,07,200. Large Non-Institutional Investors (bNIIs) need to apply for a minimum of 68 lots, or 1,360 shares, translating into an investment of Rs 10,06,400.
The IPO will remain open for subscription till June 27. Share allotment is expected to be finalised on June 30.
Shares of HDB Financial Services are scheduled to be listed on both the NSE and BSE on July 2.
HDB Financial Services IPO Subscribe Or Not?
Mirae Asset Sharekhan
Mirae Asset Sharekhan expects “healthy listing gains” and it remains “assertive from a medium to long-term perspective.”
The brokerage added that HDB Financial is valued at a FY25 price-to-book of ~3.2x to ~3.4x, which is reasonable given its growth and return metrics. Its strong parentage and smaller size compared to Bajaj Finance offer ample growth potential. A favourable macro backdrop adds to the upside, the brokerage observed in its research note.
Canara Bank Securities
Canara Bank Securities said in its note, “Despite valuation concerns, HDB’s strong brand, stable financials, rural reach, and niche positioning offer long-term potential for medium-to long-term investors.”
The brokerage views HDB Financial as a strong proxy for India’s rising credit demand, especially in the underbanked and MSME segments. Backed by HDFC Bank, the company has been profitable since FY2010, operates in 1,170 cities with 70% rural presence, and maintains a 73% secured loan mix with ~2% credit costs, the brokerage outlined in its report.
Kunvarji Finstock
Kunvarji Finstock has recommended subscribing to the HDB Financial IPO with a “long-term view.” The brokerage highlighted the company’s strong brand, diversified loan portfolio and wide distribution network backed by HDFC Bank as major strengths.
“With a focus on digital infrastructure and underbanked segments, it is well-positioned for long-term growth. Considering the company’s constant growth in its headline numbers and the recent rate cut by the RBI will improve liquidity and reduce borrowing costs, which will benefit the company,” said the brokerage in a note.
Aditya Birla Money
Aditya Birla Money has assigned a “subscribe” rating to the HDB Financial Services IPO. The brokerage highlighted that HDBFS offers a well-diversified portfolio of lending products through a strong omnichannel presence and advanced digital platforms.
It also noted the NBFC’s emphasis on asset-backed lending and disciplined risk management, as reflected in a low Gross Non-Performing Asset (GNPA) ratio of 2.26% in FY25.
Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisors and read the red herring prospectus thoroughly before placing bids.
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