(IPO) of
HDB Financial Services, a non-banking financial arm of
HDFC Bank, is set to open for subscription on June 25. Ahead of the launch, the stock is commanding a
grey market premium (GMP) of Rs 74-75, or around 10% over the upper price band.
Grey Market Premium (GMP)
trends of HDB Financial ServicesBefore IPO details were officially announced, HDB Financial shares were trading in the unlisted market between Rs 1,200 and Rs 1,350, which was nearly 70–80% higher than the IPO's upper price band of Rs 740 per share.
However, market enthusiasm has moderated following the pricing disclosure.
At the upper end of the price band, the IPO values the company at 3.72x its FY24 book value, putting it in line with listed industry peers such as
Bajaj Finance and Shriram Finance. Market watchers say this points to a more conservative and rational pricing approach than the premiums seen earlier in grey market trades.
HDB Financial Services IPO at a glanceThe HDB Financial Services IPO is set to raise Rs 12,500 crore, which includes a fresh issue of Rs 2,500 crore and an offer for sale (OFS) of Rs 10,000 crore by existing shareholders. The price band for the issue is fixed between Rs 700 and Rs 740 per share, with a face value of Rs 10. Investors can bid for a minimum of 20 shares and in multiples thereafter.The issue has reserved Rs 20 crore worth of shares for employees and up to Rs 1,250 crore for existing shareholders. Based on the price band, the post-issue market capitalization is expected to be in the range of Rs 58,205 crore to Rs 61,388 crore. The shares will be listed on both the NSE and BSE. The IPO is being managed by a consortium of 13 book-running lead managers (BRLMs), which includes Goldman Sachs, Morgan Stanley, HSBC, Motilal Oswal,
JM Financial, and others.
Brokerage view: Should you subscribe the HDB Financial Services IPO?
Brokerage house SBI Securities has given a ‘Subscribe’ rating to the IPO, citing strong fundamentals and backing by a trusted promoter group.
According to the brokerage, the company is valued at a FY25 P/B of 3.2x to 3.4x post-issue at the lower and upper price bands, respectively. It praised HDB’s strong brand, governance standards, risk management framework, and high credit ratings, noting that it is one of the largest NBFCs serving the second-largest customer franchise in the country.
SBI Securities believes HDB Financial is well-positioned to post robust growth in the coming years, alongside improving asset quality.
About HDB Financial Services
HDB Financial Services, incorporated in 2007 as a subsidiary of HDFC Bank, is today India’s 7th largest retail-focused NBFC, with a gross loan book of Rs 90,220 crore as of March 31, 2024. The company is classified by the RBI as an Upper Layer NBFC (NBFC-UL).
It operates across three core lending verticals:
Despite its lineage, HDB Financial has built an operationally independent structure, with dedicated sourcing, underwriting, and risk teams, separate from HDFC Bank.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
