HDB Financial IPO by June-end? Check issue size, likely price band & more

HDFC Bank-backed HDB Financial Services is expected to launch its initial public offering (IPO) by June-end. The Rs 12,500 crore offering shall be the biggest issue ever by an Indian non-banking financial company (NBFC). A few sources suggest that the IPO shall open for bidding on June 25, while others say June 30 as the kick-off date for the issue.

A few sources said that the company has filed its red-herring prospectus (RHP) with the exchanges, but HDFC Bank has not filed the same with exchanges yet. Filing of RHP cannot be verified by the Business Today. If there were any sudden, adverse events, change in market conditions or unexpected delays, then the above dates may change, said one source.

The IPO of HDB Financial Services includes a fresh issue of Rs 2,500 crore and an offer for sale (OFS) of Rs 10,000 crore by parent HDFC Bank Ltd, which holds 94.3 per cent stake. The firm had filed its draft red herring prospectus ( DRHP) for the IPO in October 2024.

Shares of HDB Financial Services are trading at Rs 1,150-1,200 apiece in the unlisted market, commanding a total market capitalization in the range of Rs 91,500-95,500 crore. It has a total paid-up capital of 79.58 crore equity shares. However, the company is likely to launch its IPO at a valuation of Rs 62,000-65,000 crore as per the media reports.

A note from Macquarie Capital in January 2025 said that HDB Financial Services is quoting high valuations in the unlisted markets, while peers, despite delivering higher ROEs and growth, trade at lower multiples. According to the dealers from unlisted markets, HDB Financial Services may launch its IPO around Rs 750-800 apiece.

Sandip Ginodia, CEO of Kolkata-based Altius Investech said that the company has been doing reasonably decently lately but it shall command a premium in the unlisted market. Backed by strong parentage of HDFC Group, HDB Financial Services is among the top NBFCs of India. Investors, who wish to have sure-shot allotment can buy HDB Financial shares from the pre-IPO market.

Incorporated in 2007, HDB Financial is a retail-focused, non-banking financial company. Its lending products are offered through the three business verticals: enterprise lending, asset finance and consumer finance. Its omni-channel 'phygital' distribution model combines a large branch network, in-house tele-calling teams and various external distribution networks and channel partners.

Earlier, on July 20, 2024, the board of directors of HDFC Bank provided an in-principle approval to initiate the process of listing of HDB Financial Services and formed a committee of directors to undertake various steps in this regard. The listing is a mandatory requirement with HDB Financial Services being an 'upper Layer' NBFC after the circular issued by the RBI in October 2022.

The IPO approval had triggered the buying interest in HDB Financial Services, which led to a sharp rally in the stock in the last one month, said Hitesh Dharawat of Mumbai-based boutique firm Dharawat Securities. Despite a strong parentage of HDFC Group, we are not very comfortable on the valuations at current levels in the unlisted market, he said.

For the financial year ended on March 31, 2025, HDB Financial Services reported a 24 per cent year-on-year (YOY) jump in its interest income at Rs 13,836 crore, with PAT dropping 11.5 per cent YoY to Rs 2,176 crore. Its gross and net NPAs also increased to 2.26 per cent for the reported period.

JM Financial, BNP Paribas, BofA Securities India, Goldman Sachs (India) Securities, HSBC Securities & Capital Markets, IIFL Capital, Jefferies India, Morgan Stanley India Company, Motilal Oswal Investment Advisors, Nomura Financial Advisory and Securities (India), Nuvama Wealth Management, UBS Securities India are the book running lead managers of the HDB Financial IPO.