After two days of recording notable gains since debuting on the stock markets, HDB Financial Services shares lost steam and traded in the red on July 4. The shares of the company dropped over 2 percent to hover around Rs 844 apiece.
The newly-listed stock has now snapped a two-day gaining streak, during which it rallied 17 percent from its issue price.
HDB Financial shares had made a decent debut on July 2, listing at Rs 835 apiece on NSE. This marked a premium of nearly 13 percent over its IPO price of Rs 740 apiece, beating grey market estimates.
The maiden public issue had seen strong investor interest, being subscribed 16.69 times its offer size within its three days of bidding between June 25 and June 27. After listing, HDB Financial Services became the eighth most valuable NBFC with nearly Rs 70,000-crore m-cap.
The IPO saw the biggest listing day gains among its over Rs 10,000-crore peers launched since the outbreak of COVID-19 pandemic in 2020. The market capitalization of the company currently stands at over Rs 69,990 crore.
Analysts have mixed views about the shares of the HDFC Bank-subsidiary. Emkay Global Financial advised investors to buy the shares of the company, with a target price of Rs 900 apiece. This implies an upside potential of nearly 4 percent from the current market price. The brokerage noted that the company is a highly diversified, extremely granular, and large-scale lending franchise with over 19 million customers.
"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.
Macquarie's Suresh Ganapathy however feels that the shares do not have much upside potential from the current levels. The Managing Director and Head of Financial Services Research at Macquarie Capital Securities pointed out stress in the vehicle finance segment and concerns regarding credit costs. “Based on our fair value assessment, there isn't much upside left, and risks tilt to the downside,” he was cited by CNBC-TV18 as saying.
Prashanth Tapse, Research Analyst at Mehta Equities, advised investors who missed the allotment to consider buying on dips if the stock sees short-term volatility. "HDB Financial is well-placed for a structural credit upcycle in India and is suitable for investors with a 3-5 year view," he said.
Narendra Solanki, Head Fundamental Research- Investment Services, Anand Rathi Shares and Stock Brokers, advised that investors may consider holding stock for long-term post listing.
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