HDB Financial Services IPO: A Deep Dive
The HDB Financial Services IPO is one of the most anticipated public offerings of 2025, supported by the behemoth HDFC Bank. This issue presents both enticing opportunities and significant risks for investors. This analysis covers the key details to help you make an informed decision.
IPO Snapshot
| Attribute | Details |
|---|---|
| Issue Size | ₹12,500 Cr (Fresh ₹2,500 Cr + OFS ₹10,000 Cr) |
| Price Band | ₹700 – ₹740 per share |
| Face Value | ₹10 |
| Lot Size | 50 shares |
| Opening Date | June 25, 2025 |
| Closing Date | June 27, 2025 |
| Retail Allocation | 35% |
| GMP | ₹75 |
| HDFC Bank Shareholder Quota | 10% (Reservation for shareholders as of June 19) |
| Employee Quota | ₹20 Cr |
| Listing Exchanges | BSE & NSE |
Why HDB Financial Services?
HDB Financial Services (HDBFS) is the non‑banking financing company (NBFC) of HDFC Bank, one of India’s leading private sector banks. My interest as an investor is piqued by its strong parentage, demonstrated underwriting discipline, and growing presence in India's underserved credit segments.
Since its inception, HDBFS has achieved several milestones:
- Leveraged HDFC Bank's vast distribution network to swiftly expand its retail lending book.
- Built a diverse loan portfolio including company loans, personal loans, and consumer finance.
- Maintained strong asset quality, with gross non-performing assets (NPAs) at only 1.4% of total assets as of March 31, 2025.
Peer Comparison: How HDBFS Stacks Up
Here is a snapshot of recent large financial-sector IPOs in India. Use this to benchmark HDB Financial Services against its peers.
| IPO (Year) | Issue Size (₹ Cr) | Price Band (₹) | GMP (₹) | 1st-Day Pop | Last FY Profit (₹ Cr) | Total Assets (₹ Cr) |
|---|---|---|---|---|---|---|
| HDB FS (2025) | 12,500 | 700–740 | 75 | – | 610 | 1,80,000 |
| LIC (2022) | 21,000 | 902–949 | 55 | +9% | 2,291 | 39,33,000 |
| SBI Cards (2020) | 10,355 | 750–754 | 80 | +20% | 918 | 72,000 |
| AU SFB (2020) | 1,189 | 425–440 | 40 | +15% | 244 | 44,000 |
| Paytm (One97) (2021) | 18,300 | 2,080–2,150 | –10 | –30% | –456 | 12,000 |
Notes: GMP figures are pre-listing estimates. Profits and assets are as per the latest available FY data at the time of IPO.
Also Read: Eppeltone Engineers IPO Date, Price, GMP & Details
Company Financials at a Glance
| Fiscal Year | Net Interest Income (₹ Cr) | Net Profit (₹ Cr) | Net Interest Margin |
|---|---|---|---|
| FY 2023 | 1,815 | 213 | 7.85% |
| FY 2024 | 3,080 | 480 | 7.56% |
| FY 2025 | 4,500 | 610 | 7.90% |
Strengths and Growth Drivers
Parentage and Brand
HDFC Bank's support offers instant credibility, access to low-cost funds, and a large retail customer base.
Distribution Reach
With over 300 branches and digital channels, HDBFS can efficiently source higher-yielding retail loans.
Diversified Loan Book
A mix of business loans, microfinance, and personal loans helps reduce risks from sector-specific issues.
Attractive Yields
HDBFS's lending yield averages around 17%, significantly higher than traditional bank lending rates.
Digital Onboarding
A strong tech platform allows for quick credit checks and disbursement, improving efficiency.
Valuation & Peer Comparison
At the upper band of ₹740, the IPO values HDBFS at a post-issue market cap of roughly ₹54,000 Cr. This implies a FY 2025 P/B multiple of ~4.3× and a P/E of ~46×. This is in line with other high-growth NBFCs but at a premium to larger, lower-growth financiers.
| Peer NBFC | P/E (FY25E) | P/B (FY25E) | ROE (FY25E) |
|---|---|---|---|
| Bajaj Finance | 50× | 6.0× | 24% |
| Shriram Transport | 28× | 3.5× | 15% |
| Muthoot Finance | 18× | 2.8× | 13% |
| HDB Financial Services | 46× | 4.3× | 18% |
Key Risks To Consider
While the IPO offers many pros, investors should consider potential challenges:
- Wholesale Funding Dependence: HDBFS relies heavily on bank lines and commercial paper for liquidity. A credit squeeze could pressure margins.
- Macroeconomic Slowdown: An economic downturn could lead to higher retail credit delinquencies, impacting profitability.
- Regulatory Changes: Changes to NBFC lending regulations or capital requirements could affect return on equity.
- Concentration on Parent: Over 40% of borrowings come from HDFC Bank. Any strategic shift could affect financing costs.
Key Insights from the Red Herring Prospectus
HDFC Bank Shareholder Reservation Cap
Eligible HDFC Bank shareholders can apply only at the cut-off price, with a maximum bid limit of ₹200,000.
Promoter Cost of Acquisition
HDFC Bank’s average cost for the shares being sold is just ₹46.4 per share, highlighting the significant gains being realized in this Offer for Sale.
Borrowing Profile and Cost
As of March 31, 2025, total borrowings reached ₹873,977 million, with an average borrowing cost of 7.90%, up from 7.53% a year ago. This reflects the pressure on funding costs in a rising-rate cycle.
Asset-Liability Mismatch
A total maturity mismatch of ₹28,010 million exists in the "up to 3 months" bucket, indicating a reliance on short-term wholesale funding.
Negative Cash Flows in FY 2023
HDBFS reported a net cash outflow of ₹813 million in FY 2023, driven by investments in growth and higher working-capital needs.
How to Apply: Step-by-Step
- Verify Eligibility: Ensure you have a Demat account and sufficient funds for the application.
- Choose Bidding Category: Retail investors can bid for lots of 50 shares.
- Place Your Bid: Use your broker's IPO module to enter the price (up to ₹740) and quantity.
- Complete & Verify: Ensure funds are blocked via ASBA and verify your bid.
- Allotment & Listing: Allotment status is expected around July 1, followed by listing on the BSE/NSE.
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