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Economic Times
03-07-2025
- Business
- Economic Times
HDB Financial shares zoom 20% from IPO price. Did GMP-hungry retail investors miss the memo?
Shares of HDFC Bank-backed HDB Financial Services surged as much as 6% on Thursday to an intraday high of Rs 891.65 on the BSE, extending their post-listing rally and taking total gains for IPO investors to 20.5% from the IPO issue price of Rs 740. But while institutional investors are now sitting on substantial paper gains, retail investors, many of whom sat out the IPO, are left watching from the sidelines, guided by signals that didn't tell the whole story. ADVERTISEMENT The stock had already delivered a 14% jump on debut Wednesday, listing at Rs 835 and closing the session at Rs 840.90, making it one of the year's most successful entries into the public market. One key reason for the retail hesitation lies in the market's obsession with grey market premiums (GMPs). GMP has become the unofficial indicator of market sentiment and investor excitement before an IPO hits the official stock exchange, but only for retail investors. For institutional investors, that is not the case. Before the listing, HDB Financial's IPO GMP hovered in the Rs 67–73 range, indicating an average potential listing pop of just 8%–9%. This modest projection, though later proven conservative, shaped retail expectations. 'Majority of the retail investors approach IPO from listing gains perspective and looking at the tepid GMPs, response would have been muted,' said Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities. ADVERTISEMENT Despite the GMP ticking higher just ahead of listing, retail participation remained tepid at 1.4 times subscription, far below the institutional rush. ADVERTISEMENT Qualified Institutional Buyers (QIBs) subscribed their portion of the Rs 12,500 crore IPO 55.47 times.'Institutional investors deploy money from a long-term perspective in the business and that seems to be the case with HDB too, which is backed by the strong parentage coupled with a well-established scalable business,' Agrawal said. ADVERTISEMENT Tarun Singh, MD and Founder of Highbrow Securities, attributed the overwhelming QIB demand to HDB's 'structural advantage as a diversified, RBI-upper-layer NBFC with HDFC Bank's distribution muscle.' Singh said the 55 times institutional bid 'reflects confidence in its 'phygital' Tier 2–4 reach and 23% loan book CAGR.'Singh noted that 'what institutions are really acquiring is optionality—a call option on India's financial formalization where HDB's 1,700 branches become acquisition targets themselves when the NBFC consolidation wave hits.' He added, 'the real institutional play here is regulatory arbitrage; they're front-running RBI's forced institutionalization of shadow banking.' With a capital adequacy ratio of 16.8%, 'that's not just a number; it's a war chest to consolidate market share when smaller NBFCs inevitably get squeezed by coming regulations.' ADVERTISEMENT While the smart money looked years ahead, retail investors were stuck on near-term signals and sentiment fatigue. Singh said, 'retail investors remain wary of NBFC valuations amid margin pressures,' and pointed to 'HDFC Bank stake-sale fatigue and memories of recent IPO letdowns' as reasons for the subdued echoed similar sentiments, saying that the IPO's large size and history of muted post-listing performance in other NBFCs may have led retail investors to adopt a 'wait and watch approach.'Even analysts bullish on HDB acknowledge that the stock was no bargain. 'Let's be clear—nobody's buying this IPO for its bargain valuation. At 3.5x book, you're paying full freight for the HDFC pedigree,' Singh Asset Capital Markets said HDB's fundamentals remain robust, with an ROA of 2.2% and ROE of 14.7% in FY25, and gross NPAs at 2.26%. However, it noted that the IPO is 'fully priced given the business's fundamentals and ROE of ~15%,' though the company 'may benefit from the strong HDFC brand going forward.' Brokerage Emkay Global has initiated coverage on the newly listed stock with a 'buy' rating and a target price of Rs 900. Emkay expects a RoA of 2.7% and RoE of 17% by FY28, along with a 20% CAGR in assets under management and 27% EPS CAGR between FY25 and FY28. The brokerage cited HDB's wide customer base of 19 million, branch-heavy distribution, and focus on underserved segments as long-term strengths. HDB's rally now stands as a missed opportunity for retail investors who followed short-term signals instead of strategic cues. Singh said that 'institutions aren't just buying an NBFC, they're acquiring a strategic beachhead in India's formalizing credit economy. HDB's 1,700+ semi-urban branches represent hard infrastructure that no fintech can replicate overnight.'With HDB's post-listing momentum continuing, analysts say the IPO may become a bellwether for upcoming NBFC listings. Singh noted, 'it validates RBI's push to list large NBFCs and will embolden peers, but issuers must justify valuations with granular asset-quality disclosures to win retail.' Also read | HDB Financial IPO: Why smart money saw 55 times oversubscription but retail held back at 1.4 times bids (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Time of India
02-07-2025
- Business
- Time of India
HDB Financial gives IPO investors 14% listing day gains. Should you buy, sell, or hold?
Buy, sell or hold? Live Events Is HDB fairly valued? Outlook: Is this a bellwether? (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Shares of HDFC Bank-backed HDB Financial Services made a strong debut on Wednesday, delivering over 14% gains to IPO investors on the first day of trading. The stock listed at Rs 835, a 13% premium to the issue price of Rs 740, and rose further to Rs 845.75, up another 1.3%, marking a solid start for one of the most anticipated IPOs of the Rs 12,500 crore IPO—which comprised a fresh issue of Rs 2,500 crore and an offer-for-sale (OFS) of Rs 10,000 crore—was subscribed nearly 17.65 times. The issue garnered bids worth over Rs 1.61 lakh crore, underscoring strong investor interest despite broader market the demand was primarily driven by institutional investors, with Qualified Institutional Buyers (QIBs) subscribing 55.47 times their allocated quota. In contrast, retail participation was modest, at just 1.4 times. Analysts say this divergence highlights differing investment motivations.'It shows investors are willing to bet on legacy-backed financial services plays with clear visibility. Long-term growth potential in India's NBFC space, especially in underpenetrated retail and SME lending, makes HDB an attractive proposition,' said Prashanth Tapse, Senior VP at Mehta the stock delivered early gains, brokerages remain divided on what investors should do next. Emkay Global was the first brokerage to initiate coverage on the newly listed stock, assigning a 'Buy' rating with a target price of Rs 900—implying a further upside of over 6%. The brokerage valued the stock at 3x FY27 price-to-book and expects robust performance through highlighted HDB Financial Services' scale and diversification, citing its granular and widespread lending franchise serving over 19 million customers across India. It noted the company's bottom-up growth strategy, extensive presence in remote locations—with more than 70% of branches in Tier 4 towns and beyond—and its focus on direct sourcing and underbanked customer to Emkay, HDB is well-positioned to deliver a return on assets (RoA) of 2.7% and return on equity (RoE) of 17% by March 2028. It also expects a compound annual growth rate (CAGR) of 20% in assets under management (AUM) and 27% in earnings per share (EPS) between FY25 and Equities, meanwhile, has advised IPO allottees to hold their shares for the long term, citing HDB's strategic role in India's formal credit cycle. The firm pointed to the company's strong presence in semi-urban and rural markets, robust parentage, and growing digital capabilities as key long-term read | HDB Financial gets Rs 900 target price. Should you buy after 13% listing pop? At the upper end of the price band, HDB Financial is valued at a price-to-earnings (P/E) ratio of 28.15x based on FY25 earnings, with an implied market capitalisation of approximately Rs 61,253 Asset Capital Markets noted that HDB's fundamentals remain strong, with a return on assets (RoA) of 2.2% and a return on equity (RoE) of 14.7% in FY25, along with stable asset quality — gross non-performing assets (GNPA) stood at 2.26%. While calling the IPO 'fully priced given the business's fundamentals and ROE of about 15%,' Mirae added that the company 'may benefit from the strong HDFC brand going forward.'Highbrow's Singh observed that HDB trades at a discount to Bajaj Finance but offers better diversification, particularly if it successfully leverages HDFC Bank 's network to scale its 37% asset-financing business profitably. He added that HDB's 1,700+ semi-urban branches represent strategic infrastructure 'that no fintech can replicate overnight.'The strong institutional response to HDB's IPO could influence the pipeline of upcoming financial services listings. Singh remarked, 'It validates RBI's push to list large NBFCs and will embolden peers, but issuers must justify valuations with granular asset-quality disclosures to win retail.'Mirae also noted that HDB's AAA credit rating helps contain its cost of borrowing and supports its margin profile, making it a fundamentally attractive business — even if not listing gains delivered, analysts believe a successful debut like this may shift retail sentiment in hindsight. Singh said, 'Retail participation could revive if markets stabilise and IPO pricing becomes more compelling.'For IPO allottees, most brokerages recommend holding HDB Financial shares for the medium to long term, citing the company's strong fundamentals, wide geographic reach, and strong parentage. For those who missed the IPO, analysts suggest watching for dips as potential entry points, provided the company maintains execution momentum and market sentiment remains read | HDB Financial IPO: Why smart money saw 55 times oversubscription but retail held back at 1.4 times bids (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
Mint
02-07-2025
- Business
- Mint
Strong Debut! HDFC Bank-backed HDB Financial Services shares list at ₹835, a premium of 12.84% from IPO price
HDB Financial Services IPO listing: Shares of HDFC Bank-backed HDB Financial Services made a strong debut on the bourses on Wednesday, July 2, listing at ₹ 835 on NSE and BSE, a premium of 12.84 percent from its IPO price of ₹ 740. The IPO, valued at ₹ 12,500 crore, was open for subscription from June 25 to June 27. In terms of overall issue size, HDB Financial's IPO stands out as the fourth largest public offering in India's history, trailing only behind the mega listings of Hyundai, LIC, and Paytm. HDB Financial Services' initial public offering (IPO) wrapped up with a strong response, garnering a total subscription of 17.65 times over the three-day window. The issue received bids for 217.78 crore shares, significantly exceeding the 12.33 crore shares available on offer. Retail investors portion was subscribed 1.51 times and the non-institutional investor segment attracted 10.55 times bids. Meanwhile, the qualified institutional buyer (QIB) portion witnessed the strongest demand, subscribed 58.64 times. Moreover, the employee reservation segment saw bids reaching 6.03 times and the others category was booked 4.5 times. The IPO was a combination of fresh issue of 3.38 crore shares aggregating to ₹ 2,500.00 crore and offer for sale of 13.51 crore shares aggregating to ₹ 10,000.00 crore. The minimum application size was 20 shares, implying a minimum investment of ₹ 14,800 from retail investors. HDB Financial Services plans to utilise the net proceeds from its IPO to strengthen its Tier-I capital base. The enhanced capital will support the company's future funding needs across its various business segments, including enterprise lending, asset finance, and consumer finance. The capital infusion is also intended to facilitate onward lending as part of its growth strategy. HDB Financial IPO also raised ₹ 3,369.00 crore from anchor investors on June 24, 2025. The HDB Financial IPO is being handled by a consortium of prominent domestic and international investment banks serving as book running lead managers (BRLMs). These include BNP Paribas, JM Financial, BofA Securities, Goldman Sachs India, HSBC Securities, IIFL Capital, Jefferies India, Morgan Stanley, Motilal Oswal, Nomura, Nuvama Wealth, and UBS Securities. MUFG Intime India Private Limited (Link Intime) has been appointed as the registrar to the issue, overseeing tasks such as application processing, refunds, and share allotments. Incorporated in 2007, HDB Financial Services is a retail-centric non-banking financial company (NBFC). In addition to its lending operations, the company also provides business process outsourcing (BPO) services, which include back-office support, collections, and sales assistance—primarily for its promoter. It also offers fee-based services such as the distribution of insurance products, mainly targeted at its lending customer base. HDB Financial operates through an omni-channel "phygital" model that blends its extensive physical branch network with in-house tele-calling teams, external distribution partners, and digital channels to enhance customer reach and service delivery.
Mint
02-07-2025
- Business
- Mint
Strong Debut! HDFC Bank-backed HDB Financial Services shares list at ₹835, a premium of 12.84% from IPO price
HDB Financial Services IPO listing: Shares of HDFC Bank-backed HDB Financial Services made a strong debut on the bourses on Wednesday, July 2, listing at ₹ 835 on NSE and BSE, a premium of 12.84 percent from its IPO price of ₹ 740. The IPO, valued at ₹ 12,500 crore, was open for subscription from June 25 to June 27. In terms of overall issue size, HDB Financial's IPO stands out as the fourth largest public offering in India's history, trailing only behind the mega listings of Hyundai, LIC, and Paytm. HDB Financial Services' initial public offering (IPO) wrapped up with a strong response, garnering a total subscription of 17.65 times over the three-day window. The issue received bids for 217.78 crore shares, significantly exceeding the 12.33 crore shares available on offer. Retail investors portion was subscribed 1.51 times and the non-institutional investor segment attracted 10.55 times bids. Meanwhile, the qualified institutional buyer (QIB) portion witnessed the strongest demand, subscribed 58.64 times. Moreover, the employee reservation segment saw bids reaching 6.03 times and the others category was booked 4.5 times. The IPO was a combination of fresh issue of 3.38 crore shares aggregating to ₹ 2,500.00 crore and offer for sale of 13.51 crore shares aggregating to ₹ 10,000.00 crore. The minimum application size was 20 shares, implying a minimum investment of ₹ 14,800 from retail investors. HDB Financial Services plans to utilise the net proceeds from its IPO to strengthen its Tier-I capital base. The enhanced capital will support the company's future funding needs across its various business segments, including enterprise lending, asset finance, and consumer finance. The capital infusion is also intended to facilitate onward lending as part of its growth strategy. HDB Financial IPO also raised ₹ 3,369.00 crore from anchor investors on June 24, 2025. The HDB Financial IPO is being handled by a consortium of prominent domestic and international investment banks serving as book running lead managers (BRLMs). These include BNP Paribas, JM Financial, BofA Securities, Goldman Sachs India, HSBC Securities, IIFL Capital, Jefferies India, Morgan Stanley, Motilal Oswal, Nomura, Nuvama Wealth, and UBS Securities. MUFG Intime India Private Limited (Link Intime) has been appointed as the registrar to the issue, overseeing tasks such as application processing, refunds, and share allotments. Incorporated in 2007, HDB Financial Services is a retail-centric non-banking financial company (NBFC). In addition to its lending operations, the company also provides business process outsourcing (BPO) services, which include back-office support, collections, and sales assistance—primarily for its promoter. It also offers fee-based services such as the distribution of insurance products, mainly targeted at its lending customer base. HDB Financial operates through an omni-channel "phygital" model that blends its extensive physical branch network with in-house tele-calling teams, external distribution partners, and digital channels to enhance customer reach and service delivery. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Economic Times
20-06-2025
- Business
- Economic Times
HDB Financial IPO GMP signals 11% listing pop. Check price band, issue details, more
HDB Financial Services' ₹12,500 crore IPO is attracting significant interest in the grey market. Synopsis HDB Financial IPO: Strong grey market activity signals high investor interest ahead of the eagerly awaited IPO of the HDFC Bank-backed non-banking financial company. Over the past eight sessions, the Grey Market Premium (GMP) has been on an upward trend, with Friday's GMP continuing to rise. HDB Financial Services' Rs 12,500 crore initial public offering is drawing strong interest in the unofficial market, with the grey market premium (GMP) rising to Rs 83 on Friday morning, suggesting an estimated listing price of Rs 823, a gain of over 11% from the upper end of the price band. ADVERTISEMENT The robust grey market activity reflects investor enthusiasm ahead of the much-anticipated public debut of the HDFC Bank-backed non-banking finance company. Based on the last 8 sessions' grey market activities, the GMP on Friday is trending upward. Although the highest GMP so far has touched Rs 104.50. The IPO is priced in the range of Rs 700 to Rs 740 per share. Investors can bid in lots of 20 shares, with the minimum investment for retail applicants set at Rs 14,000. To improve chances in the event of oversubscription, investors are advised to apply at the cut-off price, which takes the minimum investment to approximately Rs 14,800. For non-institutional investors, the minimum application size for small non-institutional investors is 14 lots (280 shares), amounting to Rs 2,07,200, and for big non-institutional investors, it is 68 lots (1,360 shares), amounting to Rs 10,06, Financial Services' IPO will open for subscription on June 25 and close on June 27. The listing, tentatively scheduled for July 2 on both BSE and NSE, will mark the largest public offering so far in 2025 and the biggest since Hyundai Motor India's Rs 27,000 crore issue last year. ADVERTISEMENT The offering comprises a Rs 10,000 crore offer for sale (OFS) by parent HDFC Bank and a fresh issue of Rs 2,500 crore. HDFC Bank currently holds a 94.6% stake in the company and is expected to significantly reduce its shareholding post-listing, in line with regulatory and capital optimisation IPO structure includes reserved quotas for HDFC Bank shareholders and employees. ADVERTISEMENT A consortium of global and domestic investment banks, including BofA Securities India, Goldman Sachs (India), Morgan Stanley India, JM Financial, and Motilal Oswal, are acting as book-running lead managers for the issue. MUFG Intime India (Link Intime) is the Financial is a major NBFC player focused on retail and small business borrowers across India. Its product portfolio includes personal loans, gold loans, vehicle loans, and loans against property, with a strong footprint in semi-urban and rural areas. ADVERTISEMENT The IPO comes at a time of buoyant investor sentiment. The Nifty 50 has rebounded from March lows, and liquidity remains ample after the Reserve Bank of India's recent policy stance. Analysts say the listing will be closely watched due to the HDFC Group's brand strength, the scale of the issue, and the long-term potential of the business. Proceeds from the fresh equity portion will be used to augment capital adequacy and support future lending growth. (You can now subscribe to our ETMarkets WhatsApp channel) Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Nikita Papers IPO opens on May 27, price band set at Rs 95-104 per share Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Why gold prices could surpass $4,000: JP Morgan's bullish outlook explained Cyient shares fall over 9% after Q4 profit declines, core business underperforms Cyient shares fall over 9% after Q4 profit declines, core business underperforms L&T Technology Services shares slide 7% after Q4 profit dips L&T Technology Services shares slide 7% after Q4 profit dips Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? Trump-Powell standoff puts U.S. Rate policy in crosshairs: Who will blink first? SEBI warns of securities market frauds via YouTube, Facebook, X and more SEBI warns of securities market frauds via YouTube, Facebook, X and more API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders API Trading for All: Pi42 CTO Satish Mishra on How Pi42 is Empowering Retail Traders Security, transparency, and innovation: What sets Pi42 apart in crypto trading Security, transparency, and innovation: What sets Pi42 apart in crypto trading Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains Bitcoin, Ethereum, or Altcoins? How investors are structuring their crypto portfolios, Avinash Shekhar explains The rise of Crypto Futures in India: Leverage, tax efficiency, and market maturity, Avinash Shekhar of Pi42 explains NEXT STORY
