HDB Financial Services Limited IPO (HDB Financial IPO) Detail

HDB Financial Services Limited (HDBFS), a prominent retail-focused Non-Banking Financial Company (NBFC) and a subsidiary of HDFC Bank, has launched its Initial Public Offering (IPO). This is a highly anticipated public issue, not just for its size but also due to its strong parentage and the regulatory push for upper-layer NBFCs to list.

Key IPO Details:

• Issue Size: ₹12,500 Crore (This is the largest NBFC IPO in 2025 and one of the largest in recent Indian primary market history).
• Offer Structure:
  • Fresh Issue: ₹2,500 Crore (Proceeds from this portion will go to the company to augment its Tier-I capital base, supporting future capital requirements and lending needs).
  • Offer For Sale (OFS): ₹10,000 Crore (This portion involves the sale of existing shares by the parent company, HDFC Bank, which currently holds a 94.36% stake in HDBFS. The proceeds from the OFS will go to HDFC Bank).
• Price Band: ₹700 to ₹740 per equity share.
• Face Value: ₹10 per equity share.
• IPO Open Date: June 25, 2025 (Wednesday)
• IPO Close Date: June 27, 2025 (Friday)
• Minimum Lot Size: 20 shares (Minimum investment for retail investors: ₹14,800 at the upper price band).
• Tentative Allotment Date: June 30, 2025 (Monday)
• Tentative Listing Date: July 2, 2025 (Wednesday)
• Listing At: BSE and NSE

Company Overview:

HDB Financial Services Limited, established in 2007, is the seventh largest diversified retail-focused NBFC in India by the size of its total gross loan book as of March 31, 2024. It boasts a diversified loan book across three main business verticals:

1. Enterprise Lending: Provides secured and unsecured loans to Micro, Small, and Medium Enterprises (MSMEs).
2. Asset Finance: Offers secured loans for income-generating assets like commercial vehicles, construction equipment, and tractors.
3. Consumer Finance: Provides both secured and unsecured loans for consumer goods, digital products, vehicles, and personal expenses.

As of March 31, 2025, HDBFS has over 19.2 million customers and a vast network of 1,771 branches across 1,170 towns and cities in 31 States & UTs. The company is known for its strong digital push, AI/ML-enabled credit systems, and robust credit ratings (AAA Stable from CRISIL and CARE).

Financial Highlights (Figures in ₹ Crore):

Particulars	FY2025 (Annualized/Estimated)	FY2024	FY2023
Revenue	16,300.28	14,171.12	12,402.88
Profit After Tax (PAT)	2,175.92	2,460.84	1,959.35
Net Worth	14,936.50	12,802.76	10,436.09
Gross Loan Book	~1,10,000	90,235	70,084
ROA (Return on Assets)	2.1%	2.7%	N/A
ROE (Return on Equity)	14.6%	17.9%	N/A
Gross NPA Ratio	1.90%	N/A	N/A
Net NPA Ratio	0.63%	N/A	N/A

Export to Sheets

Note: FY25 figures are estimates or based on annualized data from recent reports.

Strengths of HDB Financial Services:

• Strong Parentage: Backed by HDFC Bank, which provides significant credibility, brand equity, and access to funding.
• Diversified & Granular Loan Portfolio: Reduces concentration risk across various segments (Enterprise, Asset, Consumer Finance), with no single product exceeding 25% of the loan book.
• Extensive Distribution Network: A vast pan-India “phygital” (physical + digital) presence, especially in semi-urban and underbanked areas.
• Robust Risk Management: Utilizes a hybrid credit model, data-driven systems, and customized scorecards for effective risk assessment, reflected in healthy asset quality.
• Digital Capabilities: Strong focus on digital onboarding and loan disbursement processes.
• Regulatory Compliance: The IPO aligns with RBI’s mandate for upper-layer NBFCs to list publicly by September 2025.

Key Risks & Concerns:

• High OFS Component: A significant portion (₹10,000 Cr out of ₹12,500 Cr) is an Offer for Sale, meaning the company itself does not directly receive these proceeds.
• Profitability Pressure: PAT declined in FY2025 (estimated) compared to FY2024, partly due to interest rate volatility and rising operating costs. Net Interest Margins (NIMs) have also seen some compression.
• Dependence on Parent: While parentage is a strength, any adverse impact on HDFC Bank could indirectly affect HDBFS.
• Intense Competition: The Indian lending market is highly competitive with numerous banks and NBFCs.
• Asset Quality: While manageable, the average Gross NPA ratio over the last three years (around 2.3%) is something to monitor.

Grey Market Premium (GMP):

As of June 26, 2025, the Grey Market Premium (GMP) for HDB Financial Services IPO is reportedly around ₹60-₹75. This indicates a potential listing price of approximately ₹760 – ₹815 per share (around 8% to 10% premium over the upper price band of ₹740). GMP has shown some volatility in recent days.

Subscription Status (As of Day 1 – June 25, 2025):

The IPO received a muted response on Day 1:

• Overall: Subscribed around 0.21 times (21%)
• Retail Investors: Subscribed around 0.20 times (20%)
• Non-Institutional Investors (NII): Subscribed around 0.34 times (34%)
• Qualified Institutional Buyers (QIB): Negligible (0.01 times or 1%)
• Shareholder Quota: Subscribed around 0.58 times (58%)
• Employee Quota: Fully booked at around 1.46 times (146%)

Anchor Investors:

HDB Financial Services successfully raised ₹3,369 crore from 141 anchor investors on June 24, 2025, ahead of the IPO opening. These shares were allocated at the upper price band of ₹740 each. Prominent participants included LIC, BlackRock, Morgan Stanley, Allianz Global Investors, and various domestic mutual funds.

Brokerage Views:

Most leading brokerages have given a “Subscribe” rating to the HDB Financial IPO, citing its strong parentage, diversified portfolio, robust growth prospects, and reasonable valuations compared to some peers like Bajaj Finance, especially given the long runway for growth in India’s retail credit market. However, they also highlight the profitability pressures and the large OFS component as factors to consider.

How to Apply:

Investors can apply through ASBA (via net banking), UPI (through a registered broker/trading app), or by submitting a physical application form. The UPI Mandate Confirmation Cut-off is 5:00 PM on June 27, 2025.

Conclusion:

The HDB Financial Services IPO is a significant event in the Indian primary market, marking the largest NBFC offering of the year. Backed by HDFC Bank, the company presents a compelling opportunity for investors seeking exposure to India’s growing financial services sector. While the Day 1 subscription was subdued, and some risks persist (like the large OFS and profitability pressures), the strong fundamentals, diversified business model, and high growth potential make it an attractive long-term proposition for investors willing to ride the growth of India’s credit market. Investors should evaluate their risk appetite and investment horizon before applying.