HDB Financial IPO closes with 17x subscription; QIB portion booked 55x

The maiden public issue of HDB Financial Services saw strong investor interest on its third final day of bidding, June 27. The 12,500-crore IPO of HDFC Bank's subsidiary was subscribed 16.69 times its offer size.

The IPO, which the largest by an NBFC in India, received bids for over 217.66 crore shares, as against the offer size of 13.04 crore shares, according to data on NSE. This made it the most subscribed billion dollar IPO since Zomato-parent Eternal's public issue which was subscribed more than 29 times in 2021, Bloomberg reported.

Qualified institutional buyers (QIBs) took the lead in the subscription race in the second half of the day, by booking their reserved portion over 55 times. Non Institutional investors have subscribed their reserved portion nearly 9.98 times. Retail investors booked the portion kept for them over 1.4 times.

The maiden public offer by the subsidiary of HDFC Bank was open for public bidding from June 25 to June 27. The company aimed to raise Rs 12,500 crore through the IPO which 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.

The price band for the IPO was set at Rs 700-740 per share. Investors could bid for a minimum of 20 shares, requiring an investment of Rs 14,800, and in multiples thereafter. The allotments are likely to be announced on June 30, and the shares of the company will likely be listed on stock exchanges BSE and NSE on July 2.

HDB Financial GMP:

Ahead of listing, the unlisted shares of the company were trading with a grey market premium (GMP) of 7.16 percent over the IPO price at Rs 793 per share in the grey market, according to data on Investorgain. As per IPO Watch, the unlisted shares were trading with 7 percent GMP.

Notably, the GMP has significantly fallen from the Rs 104.5 per share quoted by the sites before the IPO opened for public bidding. However, it has risen slightly from yesterday.

Here's what analysts say

SBI Securities recommended a 'subscribe' rating to the issue. "It offers a diversified portfolio of products through its 3 business verticals. As of FY25, the share of Enterprise Lending stood at 39.3%, the share of Asset Finance stood at 38.0% and the share of Consumer Finance stood at 22.7% of the gross loan book,” it said.

Bajaj Broking, noted, "Investors with a medium- to long-term outlook may find the issue attractive, provided the company sustains growth while improving operating efficiency and asset quality post-listing." Sharekhan, expects healthy listing gains and remain assertive from a medium to long-term perspective.

LKP Securities, said, "The company has a diversified liability franchise supported by a strong credit rating of AAA stable by CRISIL and CARE, which is the highest that can be assigned on the credit rating scale for any NBFC in India." Deven Choksey also has a 'subscribe' rating for the IPO.

A day before the IPO opened for public subscription, HDB Financial Services raised a total of Rs 3,369 crore from a combined list of 141 anchor investors. The nation's top insurer and largest institutional investor in the stock markets, Life Insurance Corporation of India (LIC) emerged as the biggest anchor investor in the IPO. The total amount allocated to LIC in the anchor book portion is around Rs 220 crore, which represents 6.53 percent of the total allocations.

ICICI Prudential Banking and Financial Services Fund, SBI Flexi Cap Fund, Baillie Gifford Pacific Fund A Sub Fund of Baillie Gifford Overseas Growth Funds ICVC, Government Pension Fund Global, Goldman Sachs Funds- Goldman Sachs India Equity Portfolio, Aditya Birla Sun Life Trustee Private Limited A/C Aditya Birla Sun Life Equity Savings Fund, Kotak ELSS Tax Saver Fund, Fidelity Investment Trust Fidelity Emerging Asia Fund, were among the other notable anchor investors.

Also read: The pricing of the HDB Financial Services IPO is a surprise

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.

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.

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