HDFC Bank unit HDB Financial Services' IPO opens today; GMP at 10%. Should you subscribe?

The initial public offering (IPO) of HDB Financial Services, a non-banking financial company (NBFC) promoted by HDFC Bank, will open for subscription on Wednesday, aiming to raise Rs 12,500 crore. This marks one of the largest public issues in 2025 so far, and comes amid renewed interest in India’s financial sector IPOs.

The IPO will remain open till Thursday, June 27. The price band has been set between Rs 700 and Rs 740 per share. Ahead of the issue opening, the GMP is around Rs 74, which is 10% premium over the issue price.

The offering consists of a fresh issue worth Rs 2,500 crore and an offer for sale (OFS) of Rs 10,000 crore by parent HDFC Bank, which currently holds 95.5% in the company.

Also read: Catch all latest updates on HDB Financial Services IPO

Strong financials and business presence

HDB Financial is one of the leading NBFCs in the country with a loan book of Rs 1.06 lakh crore as of March 31, 2025. The company reported a net profit of Rs 2,176 crore for FY25, a significant rise from Rs 1,359 crore a year earlier.

Its gross non-performing assets (GNPA) stood at 2.49%, while net NPA came in at 1.38%, showing healthy asset quality for a retail-focused NBFC.

The company has a pan-India presence with over 1,700 branches across 1,200 cities and towns, and serves over 1.9 crore customers. Its business spans secured and unsecured personal loans, gold loans, and lending to small and medium enterprises (SMEs).

Valuation and Recommendations

At the upper end of the price band, the IPO values HDB Financial at a post-issue price-to-book value of 3.7 times FY25 estimates. Analysts view this as reasonable, considering its performance and HDFC Bank’s brand backing.

Brokerage houses have given a thumbs up to the IPO. SBI Securities, Ventura Securities, and Anand Rathi all issued ‘Subscribe’ calls, citing strong fundamentals, stable asset quality, and long-term growth prospects. “We believe the IPO is fairly priced given the company’s improving profitability, robust risk management and capital adequacy,” Ventura said in its report.

Anand Rathi added, “The IPO offers an opportunity to invest in a high-quality, retail-focused NBFC that benefits from HDFC Bank’s reach, reputation and systems. The improving return ratios and earnings visibility make it a compelling long-term bet.”

Use of proceeds and listing

The proceeds from the fresh issue will be used to augment HDB Financial’s capital base and support its future lending activities. The OFS component will go to the selling shareholder, HDFC Bank. Post the IPO, the parent bank’s stake will reduce significantly, aligning with regulatory norms.

The company is expected to list on both NSE and BSE in the first week of July.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)