HDB Financial IPO: Eight things to know about India's largest-ever NBFC IPO

On June 16, Moneycontrol was the first to report that HDB Financial was likely to launch its IPO by June end, targeting a post-money valuation of around $7.2 bn (around Rs 62,000 crore) at the higher end of the price band.

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

HDFC Bank's subsidiary HDB Financial is set to launch its much-anticipated IPO next week to raise Rs 12,500 crore, in what would be the biggest ever by an NBFC, which will open for public bidding between June 25-27, the lender said.

HDB Financial had filed its DRHP on October 30 last year, and received market regulator Sebi's go-ahead at the end of May this year. Here are 8 key things investors must know before subscribing to the public issue:

About the IPO:

HDB Financial aims to raise Rs 12,500 crore through the public issue with comprises a fresh issue of Rs 2,500 crore, and an offer for sale (OFS) of Rs 10,000 crore by parent company HDFC Bank, which holds 94.3 percent stake in the NBFC. HDB Financial is yet to declare the price band for the IPO.

IPO dates:

The IPO will open for anchor bidding on June 24, and for public bidding on June 25. It will remain open for subscription till June 27. The allotments will likely to be declared on June 30, and the shares of the company will likely be listed on stock exchanges BSE and NSE on July 2.

Grey Market Premium:

The unlisted shares of the company were trading with a grey market premium (GMP) of nearly Rs 103 apiece in the grey market as of June 19, as per data on Investorgain. The grey market estimates have increased recently amid buzz over the company's IPO launch.

Utilisation of the IPO funds:

The company in its draft IPO papers had said that it aims to use the net proceeds from the IPO to augment its Tier I Capital base to meet its future capital requirements, including onward lending. "The Net Proceeds are proposed to be deployed over the course of Fiscals 2025 and 2026," the company said in its draft papers.

Financials of the company:

HDB Financial had reported a 26 percent year-on-year decline in net profit for the third quarter of FY25. This decline was due to an increase in provisions linked to a deterioration in Stage 3 assets, as explained by the management during its analyst conference call.

The loan portfolio of HDB Financial Services grew by 22 percent year-on-year and 4 percent quarter-on-quarter, reaching Rs 1.02 lakh crore in the third quarter of FY25. The net interest margin for the quarter stood at 7.5 percent.

The company served 18.4 million customers through its network of 1,792 branches located in 1,168 cities and towns. During the quarter, it added 0.9 million customers and opened 20 new branches. Disbursement activity increased by 3.7 percent compared to the previous quarter, primarily driven by the asset finance and consumer finance segments.

Book building lead managers:

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

Key risks:

The company said that any downturn in India's macroeconomic environment can adversely impact its financials. A possible rise in non-performing assets (NPA) or unsecured loans are also key risks associated with investing in the company's equity.

The possibility of HDFC Bank wishing to reduce its stake in the company in the future, which will likely impact the stock, was also listed as one of the risks in the IPO papers, along with volatility in interest rates.

Also Read: These five PSUs are eligible to exit under SEBI's new relaxed delisting norms

About the company:

Founded in 2007, HDB Financial Services provides a range of loans to both individual and business clients across India. Its business is organised into three main verticals — enterprise lending, asset finance and consumer finance. The company specialises in secured and unsecured loans, consumer loans, and loans against property, with a strong presence among underbanked customer segments.