The growing interest in HDB Financial is based on the hopes of an early initial public offering (IPO).
The shares of HDB Financial, the NBFC arm of HDFC Bank, are currently being valued at more than Rs 80,000 crore in the grey market, reports suggest.
According to a report in The Economic Times, the growing interest in HDB Financial is based on the hopes of an early initial public offering (IPO).
The valuation will make the company the fourth most valuable non-bank lender in the country.
“Activity in the HDB Financial counter suddenly increased in the last few days ahead of its annual general meeting on June 21,” Narottam Dharawat, a Mumbai-based broker who deals in unlisted companies told the daily.
According to the experts, HDB Financial Services is trading extensively in the grey market, with shares being sold at Rs 1,000 to Rs 1,050 apiece.
This pushes the value of the firm to around Rs 82,000 crore, right below the likes of Bajaj Finserv at Rs 1.34 lakh crore, Bajaj Finance at Rs 2.11 lakh crore and the country’s most valuable non-bank lender, HDFC, which is valued at Rs 3.78 lakh crore
The firm is also valued just below leading private sector lender IndusInd Bank while it surpassed the valuations of Bandhan Bank, Yes Bank and IDFC Bank.
Its current price lends it a price to book value of 11.5 times, as compared to Bajaj Finance’s 10.92x and Bajaj Finserv’s 5.93x.
The report further suggests that HDB will get listed in the current financial year and its parent company, HDFC Bank is eyeing an IPO to raise around Rs 10,000 crore.
As of March 31 2019, HDFC Bank held a 95.53 percent stake in HDB Financial Services while the rest is held by individual shareholders and employee trusts.
Following an IPO, HDB Financial would become the fifth HDFC group company to be listed on the bourses.
Around August last year, brokers dealing in the grey market said that HDB shares were being bought by affluent investors at Rs 1,150 a share as against Rs 850 apiece in July the same year, as per another report in The Economic Times.
Even then, the deals came amid speculations that the company would come up with an IPO in the next 12 months.
In the last four years, HDB’s profit more than tripled, zooming from Rs 350 crore in FY15 to Rs 1,153 crore in FY19, while revenue grew 245 percent to Rs 8,725 crore. Due to the recent challenges in the NBFC sector, HDB’s AUM growth moderated in FY19 to Rs 54,700 crore.Earlier, Bloomberg reported that HDFC Bank appointed investment banks- Bank of America Merrill Lynch and Morgan Stanley- to manage the initial share sale of HDB Financial.The Great Diwali Discount!
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