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HDB Finance, the Non-Banking Financial Arm of HDFC Bank, has filed a DRHP (Draft Red Herring Prospectus) with SEBI for its IPO. 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.
RBI’s mandate for HDB Finance
This move follows the RBI’s mandate for all upper-layer NBFCs (including HDB) to go public mandatorily. HDB plans to raise capital to:
- Enhance its Tier 1 Capital Base,
- Meet future capital requirements &
- Which includes current lending operations
Currently, parent HDFC holds a 94.6% stake in the company.
What does HDB Financial Services do?
HDB Financial Services (HDBFS) is a leading Non-Banking Financial Company (NBFC).
Incorporated in 2007, we are a well-established business with strong capitalization. HDBFS is accredited with CARE AAA & CRISIL AAA ratings for its long-term debt & Bank facilities. They have an A1+ rating for its short-term debt & commercial papers, making it a strong and reliable financial institution.
Their lines of business include –Lending and BPO Services.
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%.
- The Loan Book of HDB Financial 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.
- The Earnings 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 the hdb share price positively.
- The NBFC now has more liquidity to cover its debts as its liquidity coverage ratio increased from 130% in FY23 to 140% in FY24.
- The Gross NPA has 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?
All the significant parameters of HDB Financial Shares have shown a positive indicator. This includes revenue, profit, EPS, and the increasing loan book. The operations of HDB have increased in the last 1 year, with its asset quality improving year on year. Hence actively traded in the unlisted share market.
Backed by HDFC, the current hdb financial share price can 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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