HDB Financial Services is waiting for approval from its parents HDFC Bank before going forward with their listing process. HDB plans to open around 200 branches in the current fiscal year as the NBFC aims to grow its loan book and operations.
“We are ready; it’s just that when we will be asked to, the parent decides something – this is one of those,” said Rohit Patwardhan, chief credit officer at HDB Finance. “It (IPO) is still in early stages but from a readiness standpoint since we are debt listed as far as compliance, documentation, and reporting are concerned, we are there.”
How Does HDB Plan To Grow Its Operations?
HDB Finance is looking to increase its current branch presence as it prepares to penetrate deeper into geographies with microfinance products. It has 1,600 branches at the moment.
“We will continue to increase our branch presence as we proceed, for the current financial year we are looking to add anywhere between 150 and 200 branches,” he said.
RBI New Regulations and HDB’s Response
In 2024 RBI observed high growth in certain components of consumer credit. To control this growth, RBI released a notification on 24th Nov,2023 directing banks & NBFCs to set aside more capital as risk-weighted assets. This applies to unsecured personal loans, credit cards, and lending to NBFCs.
HDB said that they won’t need to worry about the increasing risk weights on the unsecured loans as it has a well-balanced book where secured has a lot of growth avenues. As per the lender, less than a fourth of its book is unsecured.
“We have been very selective in how we do lending, as far as unsecured is concerned we assess cash flows at where the customer works and it works to our advantage,” Patwardhan said.
“Meeting customers, understanding cash flows, and having local sets of knowledge coupled with bureau information and a large digital stack allows us to look through a lot of information. We have been relatively careful to not get into buy-now-pay-later products.”
HDB Valuation and IPO Launch Date
HDB is in the upper layer of NBFCs. This means it needs to be listed by September 2025 under regulatory guidelines. As per an ET report, the NBFC could fetch a valuation in the range of $9 billion to $12 billion during the IPO.
How Is The Financial Performance Of HDB?
The Loan Book of HDB Financial Services had a significant annual growth of 30.63%. In FY 23 & FY 24, the loan book increased from Rs 66,382.7 crore to Rs 86,721.3 crore respectively.
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. This is 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 %. 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%.
Click here for a detailed HDB Financial Performance Analysis.
Is HDB Stock a Good Buy?
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