HDB Financial Services shares list at 13% premium; should you buy, sell or hold?

Shares of HDB Financial Services are made a strong Dalal Street debut on Wednesday, July 02 as the HDFC Bank-backed NBFC was listed at Rs 835 on both BSE and NSE, a premium of 12.84 per cent over its issue price of Rs 740, delivering a decent listing pop to the investors.

Emkay Global Financial Services has initiated coverage on HDB Financial Services with buy and a target price of Rs 900. "Our positive view is due to it being a highly diversified, extremely granular, and large-scale lending franchise with over 19 milion customers. It has seen multiple credit cycles, covid, and built from scratch with a bottom-up approach" it said.

Emkay added that HDB Financial's strategy of focusing on direct sourcing, remote areas, and low-to-mid-income groups with limited to no credit history has been driven by the skilled top management, reflecting strong conviction and consistency. With a favorable interest rate cycle amid frontloaded repo rate cuts driving NIM expansion, credit cost moderation, and the growth outlook improving, HDBFS is well positioned to improve profits/growth," it said.

The listing of HDB Financial Services has been on the expected lines. Ahead of its listing, HDB Financial Services was commanding a grey market premium of Rs 72-75 apeice, suggesting a listing pop of around 10 per cent over its issue price. It premium in the unofficial were increasing since the issue closed for bidding.

The IPO of HDB Financial Services ran for subscription between June 25 and June 27. The company sold its shares in the price range of Rs 700-740 per share with a lot size of 20 shares. The company raised a total of Rs 12,500 crore from its IPO, which included a fresh share sale of Rs 2,500 and an offer-for-sale (OFS) of up to Rs 10,000 crore by HDFC Bank Ltd.

Brokerage firms continued to remain positive on the issue and suggested to subscribe it for a long term view. Analysts continue the same view. The IPO of HDB Financial Services fetched nearly 46.7 lakh applications, attracting bids for nearly Rs 1.32 lakh crore. The issue was overall booked a 16.69 times across the at categories.

Mahesh Ojha, AVP-Research at Hensex Securities said that the investors should hold this stock for a long-term period and those who did not get the allotment should try to enter around its IPO price, if the market turns volatile. "It is a portfolio stock, which can be kept for the long-term," he reiterated.

Post-listing, retail investors should wait for price stabilization and monitor the stock’s performance over the first 3-6 months, said Harshal Dasani, Business Head, INVasset PMS. "Retail investors should consider entering only once the stock stabilizes or shows signs of consistent growth, capitalizing on India’s expanding credit market over the next five years," he said.

The quota for qualified institutional bidders (QIBs) was booked 55.47 times, fetching bids worth Rs 1,31,696.50 crore. The allocation for non-institutional investors (NIIs) was booked 9.99 times. Retail portion was booked 1.41 times, while the employees' portion was booked 5.72 times. Shareholders' category attracted bids for 4.26 times.

HDB Financial is well‑placed to ride India’s huge credit boom—with lending expected to grow 13‑15 per cent annually to Rs 297 lakh crore by FY28, said Shruti Jain, Chief Strategy Officer at Arihant Capital Markets. "Its strong digital onboarding and focus on under‑banked markets give it long‑term edge. Investors with a multi‑year horizon can consider holding for steady growth," she said.

"Given the strong subscription momentum and prevailing bullish sentiment in the market, we recommend holding the stock for the long term, as HDB Financial Services is strategically positioned to benefit from India’s structural credit growth, especially within the retail and SME financing segments," said Prashanth Tapse, Senior VP (Research) at Mehta Equities.

Those who did not receive any allotment may consider accumulating on any post-listing corrections, particularly during short-term volatility triggered by broader market movements. As we see HDB Financial Services offers a value-driven opportunity with both defensive and growth characteristics, best suitable for investors with a 3–5 year investment horizon, he added.

Incorporated in 2007, Ahmedabad-headquartered HDB Financial Services 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. It also offers business process outsourcing (BPO) services to its parent HDFC Bank.

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, UBS Securities India were the book running lead managers of the HDB Financial IPO, while MUFG Intime India (Link Intime) served as the registrar. Trilegal served as the advisor for the issue.