The much-awaited HDB Financial Services IPO opened for subscription on 25 June 2025. Investors have time till 27 June to bid in this Rs.12,500 crore public offering. Backed by HDFC Bank, this issue is among the biggest in recent years and has already attracted attention from market analysts and retail investors alike. But the big question remains—should you apply for it?
Company Profile: What is HDB Financial Services?
HDB Financial is a Non-Banking Financial Company (NBFC) and a wholly-owned subsidiary of HDFC Bank. It primarily offers retail loans and financial services to individuals and small businesses. While it enjoys the strong backing of India’s largest private bank, HDB has built its client base over time. It competes with leading NBFCs like Bajaj Finance, Shriram Finance, and Cholamandalam Investment.
IPO Details: Size, Price, and Structure
The IPO price band is set at Rs.700–Rs.740 per share. At this valuation, the company’s Price-to-Adjusted Book Value (P/ABV) for FY26 stands at 3x—significantly cheaper than Bajaj Finance and Cholamandalam shares. The total IPO size is Rs.12,500 crore, out of which Rs.2,500 crore will come from the issue of fresh shares, while Rs.10,000 crore is an offer-for-sale (OFS) by HDFC Bank.
After the IPO, HDFC Bank’s stake in HDB will fall from 94.3% to just under 75%, aligning with SEBI’s public shareholding norms.
Asset Quality, Growth and Comparisons
In terms of asset quality, HDB Financial performs better than Shriram Finance and L&T Finance. However, it still trails Bajaj Finance in Gross and Net Non-Performing Assets (GNPA and NNPA). For FY25, the company reported a Return on Asset (ROA) of 2.2% and Return on Equity (ROE) of 14.7%.
When compared to its peers, HDB Financial’s Assets Under Management (AUM) are on the lower side. While that may look like a weakness, it also means there’s a large room for future growth from a smaller base. Analysts see this as a major plus for long-term investors.
Retail Investors Get 35% Quota
Out of the total IPO offering, 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors. You can apply for a minimum of one lot, which consists of 20 shares. If all goes as per schedule, the allotment date is likely to be 30 June, and the listing is expected on 2 July 2025 on both BSE and NSE.
Where It Stands in Valuation
At the higher price band of Rs.740, the company is valued at approximately Rs.62,000 crore. Market analysts say that this valuation makes sense given the growth potential and strong brand support from HDFC Bank. Compared to other NBFCs, the pricing seems fair and even slightly conservative, which leaves room for upside after listing.
Expert Opinions: What Brokerages Are Saying
Several top brokerages have given a green signal for this IPO:
- SBI Securities believes HDB Financial is backed by a strong brand and has a healthy balance sheet. They suggest applying for the IPO, especially for long-term gains.
- Arihant Capital also recommends investing, but advises investors to be patient and keep a long-term view.
- Central Broking agrees with this sentiment and sees potential in the stock as HDB scales operations and improves profitability.
Despite a few concerns over asset quality and competition, most analysts find the overall proposition attractive, especially for those willing to stay invested beyond listing day.
Final Thoughts for Investors
If you are a retail investor looking for a fundamentally strong NBFC with high growth potential, the HDB Financial IPO offers a solid option. While it may not match Bajaj Finance’s profitability today, its valuation, backed by HDFC Bank, and business expansion strategy make it a promising candidate for your long-term portfolio.
