HDB Finance IPO- Valuation and On Going Road Shows

HDB Financial Services, the Non-Banking Financial arm of HDFC Bank, is planning its IPO and undertaking road shows. HDB's Officials are connecting with investors from the UK, Singapore, and other countries for potential investment. Although the NBFC has not yet filed an IPO HDB Finance IPO plans are in full swing.

HDB Valuation

HDB is being valued at around $10 Billion-$12 Billion which is around Rs 85,000-Rs 1,00,000 crore.“Final price discovery will depend on the kind of response that HDB Financial draws from interested investors,” said a banker whospoke on condition of anonymity as he isnot authorized to speak to media. “It’s too soon to comment on the pricing of the issue.”

Currently, HDB's share price in the unlisted market is Rs 1,244 per share with a market capitalization of Rs 99,928 crores.

HDB IPO Timeline

HDB Filed its Draft Red Hering Prospectus(DRHP) on Nov 24. This initial public offer is for Rs 12,500 crore, where Rs 10,000 crore is an offer for sale (OFS) and Rs 2,500 crore is a fresh issue, accruing to around 10% of HDB's equity.

They are planning to launch its IPO within the next 2-3 weeks after getting a final nod by the Securities and Exchange Board of India (SEBI). The NBFC aims to finish its IPO by the end of this fiscal year.

RBI's New Regulations Impacting HDB

On October 8, the Reserve Bank of India issued a circular named “Form of business and prudential regulations for investments” which says the bank and its subsidiaries cannot operate similar lines of business. And if they do, the holding companies are required to reduce their stake in the subsidiary within 2 years.

Although Banks have requested more time, this is a major compliance to be done by HDFC.

Analyst's View On HDB's Valuation

On Jan 7, 2025, Macquarie reported that draft RBI regulations on the overlap of similar businesses createan overhang. This can affect HDB and HDFC bank's valuations.

What is the financial performance of HDB?

• Revenue of HDB– The NBFC earns majorly through the interest earned from loans given and other income. In FY24 the NBFC earned 11,157 crores through interest income, a significant increase of 25% from Rs 8,928 crore the previous year.
• Profit After Tax(PAT)– Despite fluctuations in other income, HDB’s overall profitability still increased by 25.6 % as the PAT soared to Rs 2,461 crores in FY24 as compared to Rs 1,959 crores in the previous years. The Net Profit Margin also increased by 15.8% to 17.36%.
• TheLoan Book of HDBFinancial Services had a significant annual growth of 30.63%,with respect to the loans given by HDB as the FY 23 & FY 24 loan book increased from Rs 66,382.7 crore to Rs 86721.3 crore. This suggests an assertive growth in the lending operations of HDB Financial Services and a potential upward demand for their products and services.
• TheEarnings Per Share(EPS)showed a significant growth from Rs 24.78 in FY 23 to Rs 31.08 per share in FY 24, an approximate 25% increase. This indicates a shareholder wealth growth and impacts thehdb share pricepositively.
• The NBFC now has more liquidity to cover its debts as itsliquidity coverage ratioincreased from 130% in FY23 to 140% in FY24.
• TheGross NPAhas improved significantly in the last 3 years. On March 22, the gross NPA reached 4.99% which caused concern among investors as the asset quality was deteriorating. On March 23, the asset quality improved to 2.73%. By the end of FY 23-24, the Gross NPA reduced to 1.9%.

Is HDB Stock a Good Buy?

Backed by HDFC, the currenthdb financial share pricecan be a gainful buy, especially with IPO around the corner. At Stockify, we help our clients uncover the best unlisted shares and increase their wealth with our in-depth research and insights. Our platform serves all your unlisted share needs with the best offerings.

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