HDB Financial Services IPO kicks off today: Should you subscribe to it?

The initial public offering on HDB Financial Services opens for bidding today, on Wednesday, June 25. The HDFC Bank promoted NBFC is selling its shares in the range of Rs 700-740 apiece with a lot size of 20 equity shares and its multiples thereafter. The issue shall close for bidding on Thursday, June 27.

HDB Financial Services is looking to raise a total of Rs 12,500 crore via IPO, which includes a fresh share sale of Rs 2,500 and an offer-for-sale (OFS) of up to Rs 10,000 crore by HDFC Bank. The net proceeds from the issue shall be utilized towards augmentation of its Tier-I capital base to meet their future capital requirements.

Incorporated in 2007, Ahmedabad-headquartered HDB Financial Services is a retail-focused, non-banking financial company. Its lending products are offered through the three business verticals- enterprise lending, asset finance and consumer finance. It also offers business process outsourcing (BPO) services to its parent HDFC Bank.

HDB Financial Services raised Rs 3,369 crore from 141 anchor investors as it allotted 45 million shares at Rs 740 apiece. Marquee anchor investors include Blackrock, Baillie Gifford Pacific Fund, Government Pension Fund Global, Goldman Sachs, Templeton, the Abu Dhabi Investment Authority (ADIA), LIC and domestic mutual funds and insurance players.

HDB Financial Services has reserved shares for Rs 20 crore for its eligible employees, while shares for Rs 1,250 crore are reserved for the eligible shareholders of HDFC Bank. The company had reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) and retail investors will get 15 per cent and 35 per cent, respectively.

For the year ended on March 31, 2025, HDB Financial Services reported a net profit of Rs 2,175.92 crore with a revenue of Rs 16,300.28 crore. The company clocked a net profit of Rs 2,460.84 crore with a revenue of Rs 14,171.12 crore for the financial year 2023-24. The company shall command a market capitalization more than Rs 61,250 crore.

BNP Paribas, JM Financial, Bofa Securities India, Goldman Sachs (India), HSBC Securities & Capital Markets, IIFL Capital, Jefferies India, Morgan Stanley India, Motilal Oswal Investment, Nomura Financial Advisory, Nuvama Wealth, UBS Securities India are the book running lead managers of the HDB Financial IPO, while MUFG Intime India (Link Intime) is the registrar for the issue. Here’s what a host of brokerage firms say about the IPO of HDB Financial Services:
 

Nirmal Bang Securities
Rating: Subscribe for long-term
HDB Financials’ loan growth has been in line with peers over the last 3 years. However we note that owing to HDB’s prudent focus on quality of customers, it earns a lower spread vis-à-vis peers. Also HDB’s operational cost is elevated. HDB has managed to deliver a ROA in the range of between 2 to 3 per cent over the last 3 years with FY25 post IPO ROA of 2 per cent, said Nirmal Bang Securities.

“We believe that HDB should be valued at a substantial discount to Bajaj Finance, its superior parentage and asset quality performance lead us to believe that it is attractively valued from a long term perspective upon comparison with Chola. HDB’s valuation is in line with the peer average which provides us comfort,” it said with a ‘subscribe for long-term’ rating.
 

Anand Rathi Research
Rating: Subscribe
HDB Financial has built a pan-India hybrid presence, comprising over 1,771 physical branches across more than 1,170 towns and cities in 31 States and Union Territories as of March 31, 2025, supported by a digitally enabled distribution network through both in-house and third-party channels, said Anand Rathi Research.

It intends to diversify their funding sources by expanding and strengthening their lender base, with the goal of optimizing leverage and reducing the average cost of borrowings. Backed by the strong parentage of HDFC Bank, HDB Financial offers a well-diversified product portfolio with robust granularity, scale, and sound lending quality,” it said with a ‘subscribe’ rating.
 

Choice Broking
Rating: Subscribe for long-term
HDB Financial Services is categorized as an Upper layer NBFC by RBI. Its lending products are offered through three business verticals. Its loan book comprises 73 per cent secured loans and 27 per cent unsecured loans, with its customer base primarily consisting of salaried individuals, self-employed professionals, and business owners, said Choice Broking.

“It has delivered steady growth in interest income driven by the expansion of its gross loan book, profitability has been impacted by interest rate volatility. The NIM has been under pressure and remains lower compared to peers. The declining ROE and PCR further underscore operational concerns. The company is well-positioned for long-term growth,” it said with a ‘subscribe for long term’ rating.
 

Arihant Capital Markets
Rating: Subscribe for long term
HDB Financial is strategically positioned to benefit from India’s massive credit expansion opportunity, with systemic credit projected to grow at 13-15 per cent CAGR to reach Rs 297 lakh crore by FY28. Its digital-first approach perfectly aligns with India’s digital payment revolution, while its proven multi-cycle experience enables it to capture the expanding Middle India segment, said Arihant Capital.

“Its strategic focus on the underbanked segments in India, supported by an extensive omni-channel distribution network that blends physical branches with robust digital capabilities, positions it well to capture future market opportunities. The issue is valued at a P/BV ratio of 3.87 times, based on a book value of Rs 191 per share,” it added with a ‘subscribe for long-term’ rating.
 

SBI Securities
Rating: Subscribe
HDB Financial Services is valued at an FY25 P/B of 33.4x at post issue capital at the upper price band respectively. It is backed by strong parentage, brand, governance, risk management and a high credit rating, said SBI Securities. “It is one of the largest NBFCs. It is well placed to register healthy growth going ahead, while witnessing an improvement in the asset quality” it said with a ‘subscribe’ rating.
 

Chola Securities
Rating: Subscribe for listing gains
In line with industry trend there has been slippage in asset quality, rise in incremental credit cost and compression in net interest margins in FY25 over FY24. However, the tail winds of interest rate cuts, falling inflation trajectory, normal monsoons is likely to address aforesaid concerns going forward, said Chola Securities with a ‘subscribe for listing gains’ for the issue.
 

DR Choksey Finserv
Rating: Subscribe
DR Choksey expects that its AUM and disbursement will witness higher growth compared to FY25, led by higher urban and rural consumer demand driven by government’s intervention in reducing income tax rates, RBI’s efficient inflation management and expected cuts in GST rates for the overall consumption basket.

“HDB’s initial issue is priced at 3.4 times TTM P/B compared to the peer average of 4.4 times TTM P/B. We believe the issue is attractively priced considering its parentage, peer group ROA average and its growth potential. We assign a ‘subscribe’ rating to the issue,” it added.
 

Canara Bank Securities
Rating: Subscribe for long-term
HDB Financial Services serves as a strong proxy for India’s growing credit demand in underbanked and MSME segments. It has a 73 per cent secured loan mix, has been profitable since FY10, operates across 1,170 cities with 70 per cent rural presence, and maintains a granular, diversified loan book with well-managed 2 percent credit costs, said Canara Bank Securities.

“It runs independently with robust digital infrastructure enabling scalable growth. The IPO is priced higher than peers like Cholamandalam and Shriram Finance, but lacks Bajaj Finance’s premium, limiting fresh capital inflow. Despite valuation concerns, HDB’s strong brand, stable financials, rural reach, and niche positioning offer long-term potential for medium-to-long-term” it said.
 

Aditya Birla Money
Rating: Subscribe
HDB Financial Services has strong presence in semi-urban and underbanked markets, diversified and expanding loan portfolio, advanced digital capabilities, and robust financial performance underscore its compelling long-term investment potential. It continues to drive inclusive growth and innovation in India’s expanding financial sector, it said, suggesting subscribing to the issue.
 

Bajaj Broking Research
Rating: Subscribe for long-term
Valuation is supported by long-term structural tailwinds in NBFC lending, especially to underserved segments. However, near-term asset quality and margin pressures pose risks, said Bajaj Broking. “Investors with a medium- to long-term outlook may find the issue attractive, provided the company sustains growth while improving operating efficiency and asset quality post-listing.”