HDB Financial’s Rs 12,500 crore IPO reveals 10 key insights

Jun 22, 2025, 12:39:25 PM IST

HDB Financial Services’ initial public offering opens on June 25 and will be the largest IPO so far this year. While only a portion of the proceeds will go to the company, the offering signals a broader structural shift within the HDFC group. Here are 10 key developments around the issue, based on company filings and brokerage research.

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With assets under management of Rs 1.07 lakh crore as of March 2025, HDB Financial ranks as the fourth-largest retail-focused NBFC in India by gross loan book, according to SBI Securities. The company serves 1.9 crore customers.

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HDFC Bank, which holds a 94.6% stake in HDB Financial, will dilute its shareholding to about 74% through the offer. This aligns with regulatory expectations outlined in the RBI’s October 2024 draft circular on bank-owned NBFCs.

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The IPO is priced between Rs 700 and Rs 740 per share, implying a post-issue market capitalisation of Rs 58,889 crore at the upper band. This is a steep discount to the company’s reported valuation in the unlisted space.

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Net interest income rose to Rs 7,446 crore in FY25 from Rs 6,292 crore the previous year. However, net profit declined to Rs 2,175.9 crore from Rs 2,460.8 crore. SBI Securities attributes the dip to higher provisions and operating costs.

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HDB’s return on assets stood at 2.2% and return on equity at 14.7% for FY25. In comparison, peers such as Bajaj Finance and Cholamandalam reported stronger profitability ratios, according to SBI Securities’ peer comparison.

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HDB’s average cost of borrowing was 7.9% in FY25, among the lowest in the sector. The company benefits from a AAA credit rating by Crisil and CARE, supported by HDFC Bank’s ownership.

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Gross NPAs stood at 2.3% and net NPAs at 1.0% as of March 2025. Provision coverage ratio was 56%. These figures place HDB in the mid-range among comparable NBFCs, per analysts.

The company operates 1,771 branches across 31 states and union territories, with around 70% of its business located in non-metro regions. It follows a “phygital” model combining physical infrastructure with digital tools. The distribution model includes in-house telecalling teams and external partners.

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Only Rs 2,500 crore of the issue is a fresh equity raise; the remaining Rs 10,000 crore is an offer-for-sale by HDFC Bank. The structure reflects a shift in ownership strategy as much as a capital infusion.
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