The HDB Financial Services IPO opened today, June 25, 2025, for subscription and will close on June 27, 2025. This is a highly anticipated and significant IPO in the Indian financial market, being a subsidiary of HDFC Bank.

HDB Financial Services IPO Information:

• Issue Type: Book Built Issue.

• Issue Size: ₹12,500 crore (₹2,500 crore Fresh Issue + ₹10,000 crore Offer For Sale)

• Price Band: ₹700 to ₹740 per equity share

• Face Value: ₹10 per equity share

• Lot Size: 20 shares

• Minimum Investment : ₹14,800 (1 lot = 20 shares x ₹740)

• Maximum Investment : ₹1,92,400 (13 lots = 260 shares x ₹740)

• Listing: BSE and NSE

• IPO Open Date: June 25, 2025

• IPO Close Date: June 27, 2025

• Tentative Allotment Date: June 30, 2025

• Initiation of Refunds: July 1, 2025

• Credit of Shares to Demat Account: July 1, 2025

• Tentative Listing Date: July 2, 2025

Issue Structure HDB Financial Services IPO :

• Fresh Issue: This component involves the issuance of 3.38 crore new equity shares, aggregating to ₹2,500 crore. The net proceeds from this will be used by HDB Financial Services to augment its Tier-1 capital base, thereby strengthening its financial position and supporting its future lending and investment activities.

• Offer For Sale (OFS): This portion comprises the sale of 13.51 crore shares, amounting to ₹10,000 crore, by the promoter, HDFC Bank. The proceeds from this OFS will directly go to HDFC Bank and will not be received by HDB Financial Services.

3. HDB Financial Services Company Detail :

• HDB Financial Services is a Non-Banking Financial Company (NBFC) and a subsidiary of HDFC Bank, one of India's largest private sector banks.

• It is recognized as an Upper Layer NBFC by the Reserve Bank of India (RBI), indicating its systemic significance and closer regulation.

• Business Verticals: The company has a diversified lending portfolio across three main verticals:

  • Enterprise Lending: Provides secured and unsecured loans to Micro, Small, and Medium Enterprises (MSMEs) and select salaried individuals.

  • Asset Finance: Offers financing for the purchase of new and used commercial vehicles, construction equipment, and agricultural tractors.

  • Consumer Finance: Provides personal loans, consumer durable loans (for items like mobile phones, computers, televisions), gold loans, and other retail financing solutions.

• Geographic Reach: As of March 31, 2025, HDB Financial Services operates through 1,771 branches spread across 1,170 towns and cities in 31 states and union territories in India.

• Customer Base: The company serves over 17.5 million customers, with a focus on underbanked and 'new to credit' segments.

• BPO Services: HDB Financial Services also provides business process outsourcing (BPO) services to HDFC Bank, including collection services, back-office operations, and sales support.

4. Financial Performance of HDB financial services:

ParticularsMarch 31, 2025March 31, 2024March 31, 2023Assets1,08,663.2992,556.5170,050.39Revenue16,300.2814,171.1212,402.88Profit After Tax (PAT)2,175.922,460.841,959.35EBITDA9,512.378,314.136,251.16Net Worth14,936.5012,802.7610,436.09Borrowings87,397.7774,330.6754,865.31

Key Financial Highlights of HDB financial services:

• Revenue from operations increased by 15% to ₹16,300.28 crore in FY25.

• However, Profit After Tax (PAT) saw an 11.57% decline in FY25 compared to FY24, primarily due to higher credit costs and interest rate volatility.

• As of March 2025, the company's Assets Under Management (AUM) stood at approximately ₹1.07 lakh crore.

• The Gross Non-Performing Asset (GNPA) ratio was 1.9% in FY24, indicating sound asset quality.

• The Debt-to-Equity Ratio is 5.85, reflecting a relatively high leverage.

5. Grey Market Premium (GMP) of HDB financial Services

• As of June 25, 2025, the Grey Market Premium (GMP) for HDB Financial Services IPO is hovering around ₹74.

• This indicates a potential listing gain of approximately 10% over the upper price band of ₹740.

• The GMP has shown some volatility, ranging from ₹46 to ₹104.50 in recent days, reflecting evolving investor sentiment.

6. Expert Views and Risks:

• Strengths:

  • Strong Parentage: Backed by HDFC Bank, which provides significant brand value, credibility, and operational support.

  • Diversified Lending Portfolio: Reduces concentration risk and caters to a wide range of customers.

  • Extensive Omni-channel Network: Combines physical branches with digital platforms for broad reach, especially in semi-urban and rural areas.

  • Robust Risk Management: Employs strong credit underwriting and collection systems.

  • Reasonable Valuation: Analysts suggest the IPO is fairly priced compared to its peers.

  • Regulatory Compliance: The IPO aligns with RBI's mandate for Upper Layer NBFCs to list by September 2025.

• Risks:

  • Profitability Pressure: The decline in PAT in FY25 and sensitivity to interest rate fluctuations could impact future profitability.

  • High OFS Component: A significant portion of the IPO is an OFS, meaning the funds go to the promoter (HDFC Bank) and not directly to the company for its operations or growth.

  • Intense Competition: The Indian lending sector is highly competitive.

  • Exposure to Unsecured Loans: While diversified, exposure to unsecured loans carries inherent risks.

  • Dependency on "HDFC" Brand: The company uses the HDFC name under a licensing agreement, and any changes to this arrangement could have future implications.

  • Regulatory Overhang: The proposed RBI guidelines to avoid business overlaps between banks and their subsidiaries could lead to further stake divestment by HDFC Bank.

Conclusion:

The HDB Financial Services IPO is a significant event in the Indian primary market. The company benefits from strong backing, a diversified business model, and a wide distribution network. While the recent dip in PAT and the high OFS component are points to consider, many analysts view the IPO as a long-term subscription opportunity given its growth prospects and sound fundamentals within the NBFC sector. Investors should carefully assess their risk appetite and financial goals before making an investment decision, and it's advisable to consult with financial advisors.

HDB FINANCIAL SERVICES