surged as much as 6% on Thursday to an intraday high of Rs 891.65 on the BSE, extending their post-listing rally and taking total gains for IPO investors to 20.5% from the IPO issue price of Rs 740. The stock settled 2.88% higher at Rs 865.1 apiece. But while institutional investors are now sitting on substantial paper gains,
retail investors, many of whom sat out the IPO, are left watching from the sidelines, guided by signals that didn’t tell the whole story.The stock had already delivered a 14% jump on debut Wednesday, listing at Rs 835 and closing the session at Rs 840.90, making it one of the year’s most successful entries into the public market.
One key reason for the retail hesitation lies in the market's obsession with grey market premiums (GMPs). GMP has become the unofficial indicator of market sentiment and investor excitement before an IPO hits the official stock exchange, but only for retail investors.
For institutional investors, that is not the case.
Before the listing, HDB Financial’s
IPO GMP hovered in the Rs 67–73 range, indicating an average potential listing pop of just 8%–9%. This modest projection, though later proven conservative, shaped retail expectations.
“Majority of the retail investors approach IPO from listing gains perspective and looking at the tepid GMPs, response would have been muted,” said Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities.Despite the GMP ticking higher just ahead of listing, retail participation remained tepid at 1.4 times subscription, far below the institutional rush.
Qualified Institutional Buyers (QIBs) subscribed their portion of the Rs 12,500 crore IPO 55.47 times.
“Institutional investors deploy money from a long-term perspective in the business and that seems to be the case with HDB too, which is backed by the strong parentage coupled with a well-established scalable business,” Agrawal said.
Tarun Singh, MD and Founder of Highbrow Securities, attributed the overwhelming QIB demand to HDB’s “structural advantage as a diversified, RBI-upper-layer NBFC with HDFC Bank’s distribution muscle.” Singh said the 55 times institutional bid “reflects confidence in its 'phygital' Tier 2–4 reach and 23% loan book CAGR.”
Singh noted that “what institutions are really acquiring is optionality—a call option on India’s financial formalization where HDB’s 1,700 branches become acquisition targets themselves when the NBFC consolidation wave hits.” He added, “the real institutional play here is regulatory arbitrage; they’re front-running RBI’s forced institutionalization of shadow banking.” With a capital adequacy ratio of 16.8%, “that’s not just a number; it's a war chest to consolidate market share when smaller NBFCs inevitably get squeezed by coming regulations.”
While the smart money looked years ahead, retail investors were stuck on near-term signals and sentiment fatigue. Singh said, “retail investors remain wary of NBFC valuations amid margin pressures,” and pointed to “HDFC Bank stake-sale fatigue and memories of recent IPO letdowns” as reasons for the subdued demand.
Agrawal echoed similar sentiments, saying that the IPO’s large size and history of muted post-listing performance in other NBFCs may have led retail investors to adopt a “wait and watch approach.”
Even analysts bullish on HDB acknowledge that the stock was no bargain. “Let’s be clear—nobody’s buying this IPO for its bargain valuation. At 3.5x book, you're paying full freight for the HDFC pedigree,” Singh said.
Mirae Asset Capital Markets said HDB’s fundamentals remain robust, with an ROA of 2.2% and ROE of 14.7% in FY25, and gross NPAs at 2.26%. However, it noted that the IPO is “fully priced given the business’s fundamentals and ROE of ~15%,” though the company “may benefit from the strong HDFC brand going forward.”
Brokerage Emkay Global has initiated coverage on the newly listed stock with a “buy” rating and a target price of Rs 900. Emkay expects a RoA of 2.7% and RoE of 17% by FY28, along with a 20% CAGR in assets under management and 27% EPS CAGR between FY25 and FY28. The brokerage cited HDB’s wide customer base of 19 million, branch-heavy distribution, and focus on underserved segments as long-term strengths.
HDB’s rally now stands as a missed opportunity for retail investors who followed short-term signals instead of strategic cues. Singh said that “institutions aren’t just buying an NBFC, they’re acquiring a strategic beachhead in India’s formalizing credit economy. HDB’s 1,700+ semi-urban branches represent hard infrastructure that no fintech can replicate overnight.”
With HDB’s post-listing momentum continuing, analysts say the IPO may become a bellwether for upcoming NBFC listings. Singh noted, “it validates RBI’s push to list large NBFCs and will embolden peers, but issuers must justify valuations with granular asset-quality disclosures to win retail.”
Also read | HDB Financial IPO: Why smart money saw 55 times oversubscription but retail held back at 1.4 times bids
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