HDB Financial shares surge in unlisted market as HDFC Bank unit plans IPO launch

HDB Financial Services shares are soaring in the unlisted market.

HDB Financial Services shares have seen significant activity in the unlisted market, ahead of its initial public offering (IPO) launch.

The HDFC Bank subsidiary filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in October, triggering a sharp rise in the company’s unlisted share prices last month.

While prices have since cooled, they remain above the Rs 1,000 mark, reflecting continued investor interest.

HDB Financial Services shares are currently trading at Rs 1,295 per share in the unlisted market. Around October 20, the shares were trading at Rs 1,450 apiece.

The decision to take HDB Financial Services public follows a mandate issued by the Reserve Bank of India in October 2022, requiring non-banking financial companies (NBFCs) in the upper layer to list on stock exchanges within three years.

Despite the proposed IPO, HDB Financial Services will continue as a subsidiary of HDFC Bank, ensuring compliance with applicable regulations, according to the company’s filings.

HDB Financial IPO: 10 key things to know as HDFC Bank's NBFC arm prepares for stock market debut

The company plans to raise Rs 12,500 crore in the primary market. Proceeds from the fresh issue will be used to strengthen the company's Tier-I capital base to support future capital needs.

HDFC Bank is seeking a valuation of Rs 78,000-87,000 crore for HDB Finance, translating to an estimated price-to-book value of 4.5 to 5 times.

In FY23, the company’s loan book grew 17 percent year-on-year to reach Rs 66,000 crore, driven by strong demand for personal, vehicle, and small business loans. In the fiscal year 2023-24, the company's total revenue from operations increased to Rs 14,171 crore from Rs 12,402 crore in the previous year. Profit for the year also rose to Rs 2,460 crore in FY24 from Rs 1,959 crore in FY23.

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