Latest news with #PrashanthTapse
Time of India
41 minutes ago
- Business
- Time of India
Mega IPOs turn into mega disasters: Can HDB Financial break the Rs 10,000 crore curse?
India's mega IPO market has become a graveyard for investor wealth, with a staggering pattern emerging that should alarm anyone betting big on HDB Financial Services ' Rs 12,000 crore debut. Out of the last eight IPOs exceeding Rs 10,000 crore, six have delivered crushing losses to investors within six months of listing, posting an average negative return of 20%. The carnage deepens over a year, with average losses widening to 25%, only SBI Cards managed to stay afloat with positive returns, according to data from SAMCO Securities and ACE Equity. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Trekking pants for mountain sports and adventure travel Trek Kit India Shop Now Undo The carnage spans across sectors: Paytm collapsed 62% in six months and 65% over a year, while Reliance Power imploded 52% and 71% respectively. Even insurance giant LIC, despite its blue-chip credentials, tumbled 24% in six months and 35% over 12 months. "The track record of mega IPOs is frankly terrifying," said a senior fund manager who declined to be named. "When you're raising over Rs 10,000 crore, you're essentially asking the market to absorb an enormous amount of paper, and history shows that rarely ends well." Live Events Also Read | HDB Financial Services gets Rs 900 target price. Should you buy after 13% listing pop? HDB Financial's Promising Start Yet HDB Financial Services defied initial skepticism, listing at a 13% premium to its issue price and touching a high of Rs 845.75 on BSE. The HDFC Bank subsidiary's debut has prompted bullish calls from analysts betting on its unique positioning in India's credit landscape. Emkay Global led the charge with a buy rating and target price of Rs 900, representing 22% upside potential. "What makes HDBFS a great investment? It is backed by HDFC Bank's parentage and AAA rating. It has the right ingredients in the form of financial capital and human capital to be a successful, high-quality lender," the brokerage said in its initiation note. The firm highlighted HDB Financial's strategy of targeting tier-4 towns and beyond, serving unbanked customers with limited credit history — a niche that could prove lucrative as India's credit penetration deepens. Unlike previous mega IPO disasters, HDB Financial carries the backing of India's largest private sector bank, a factor that analysts believe could shield it from the typical post-listing blues. "Given the strong subscription momentum and prevailing bullish sentiment in the market, we recommend holding the stock for the long term, as HDB Financial Services is strategically positioned to benefit from India's structural credit growth, especially within the retail and SME financing segments," said Prashanth Tapse, Senior VP (Research) at Mehta Equities. Emkay Global projects the company will deliver approximately 20% AUM growth and 27% EPS CAGR, with return on assets improving to 2.7% and return on equity reaching 17% by FY28, up from 2.16% and 14.7% respectively in FY25. HDB Financial has already scaled to over Rs 1 trillion in assets under management without raising external capital for eight years, a feat that distinguishes it from many of its mega IPO predecessors that were still burning cash or struggling with profitability. The company has weathered multiple credit cycles, including the Covid-19 pandemic, while maintaining profitable growth through its diversified product portfolio spanning secured and unsecured loans. However, regulatory headwinds loom. The RBI's draft circular on 'Forms of Business and Prudential Regulation for Investments' could force HDFC Bank to either merge HDB Financial or reduce its ownership below 20%, a development that could reshape the investment thesis entirely. For investors who missed the IPO allocation, Tapse suggests accumulating on post-listing corrections, particularly during market volatility. "HDB Financial Services offers a value-driven opportunity with both defensive and growth characteristics, best suitable for investors with a 3-5 year investment horizon," he noted. Whether HDB Financial can break the mega IPO curse remains to be seen, but its strong parentage and established business model offer more hope than the graveyard of failures that came before it.
Economic Times
41 minutes ago
- Business
- Economic Times
Mega IPOs turn into mega disasters: Can HDB Financial break the Rs 10,000 crore curse?
India's mega IPO market has become a graveyard for investor wealth, with a staggering pattern emerging that should alarm anyone betting big on HDB Financial Services' Rs 12,000 crore debut. ADVERTISEMENT Out of the last eight IPOs exceeding Rs 10,000 crore, six have delivered crushing losses to investors within six months of listing, posting an average negative return of 20%. The carnage deepens over a year, with average losses widening to 25%, only SBI Cards managed to stay afloat with positive returns, according to data from SAMCO Securities and ACE Equity. The carnage spans across sectors: Paytm collapsed 62% in six months and 65% over a year, while Reliance Power imploded 52% and 71% respectively. Even insurance giant LIC, despite its blue-chip credentials, tumbled 24% in six months and 35% over 12 months. "The track record of mega IPOs is frankly terrifying," said a senior fund manager who declined to be named. "When you're raising over Rs 10,000 crore, you're essentially asking the market to absorb an enormous amount of paper, and history shows that rarely ends well." Also Read | HDB Financial Services gets Rs 900 target price. Should you buy after 13% listing pop? ADVERTISEMENT Yet HDB Financial Services defied initial skepticism, listing at a 13% premium to its issue price and touching a high of Rs 845.75 on BSE. The HDFC Bank subsidiary's debut has prompted bullish calls from analysts betting on its unique positioning in India's credit Global led the charge with a buy rating and target price of Rs 900, representing 22% upside potential. "What makes HDBFS a great investment? It is backed by HDFC Bank's parentage and AAA rating. It has the right ingredients in the form of financial capital and human capital to be a successful, high-quality lender," the brokerage said in its initiation note. ADVERTISEMENT The firm highlighted HDB Financial's strategy of targeting tier-4 towns and beyond, serving unbanked customers with limited credit history — a niche that could prove lucrative as India's credit penetration previous mega IPO disasters, HDB Financial carries the backing of India's largest private sector bank, a factor that analysts believe could shield it from the typical post-listing blues. ADVERTISEMENT "Given the strong subscription momentum and prevailing bullish sentiment in the market, we recommend holding the stock for the long term, as HDB Financial Services is strategically positioned to benefit from India's structural credit growth, especially within the retail and SME financing segments," said Prashanth Tapse, Senior VP (Research) at Mehta Global projects the company will deliver approximately 20% AUM growth and 27% EPS CAGR, with return on assets improving to 2.7% and return on equity reaching 17% by FY28, up from 2.16% and 14.7% respectively in Financial has already scaled to over Rs 1 trillion in assets under management without raising external capital for eight years, a feat that distinguishes it from many of its mega IPO predecessors that were still burning cash or struggling with profitability. ADVERTISEMENT The company has weathered multiple credit cycles, including the Covid-19 pandemic, while maintaining profitable growth through its diversified product portfolio spanning secured and unsecured loans. However, regulatory headwinds loom. The RBI's draft circular on 'Forms of Business and Prudential Regulation for Investments' could force HDFC Bank to either merge HDB Financial or reduce its ownership below 20%, a development that could reshape the investment thesis entirely. For investors who missed the IPO allocation, Tapse suggests accumulating on post-listing corrections, particularly during market volatility. "HDB Financial Services offers a value-driven opportunity with both defensive and growth characteristics, best suitable for investors with a 3-5 year investment horizon," he noted. Whether HDB Financial can break the mega IPO curse remains to be seen, but its strong parentage and established business model offer more hope than the graveyard of failures that came before it. (You can now subscribe to our ETMarkets WhatsApp channel)
Mint
an hour ago
- Business
- Mint
HDB Financial Services Share Price Live: Stock makes a strong debut, opens with 12.84% premium at ₹835 on NSE
Shares of the HDB Financial Services Ltd, a subsidiary of HDFC Bank, will make its debut in the Indian stock market today. HDB Financial Services IPO listing is scheduled at 10:00 IST on the bourses today (Wednesday, July 2). HDB Financial Services shares will be a part of Special Pre-open Session (SPOS), as per BSE notice. Experts predict that the HDB Financial Services IPO expected listing price to have a healthy 8–10% listing gain, reflecting strong investor appetite. HDB Financial Services IPO allotment status was finalised on Monday, June 30. Ahead of the HDB Financial Services IPO listing, HDB Financial Services IPO GMP today is +65. This indicates HDB Financial Services share price was trading at a premium of ₹ 65 in the grey market, according to Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of HDB Financial Services share price is indicated at ₹ 805 apiece, which is 8.78% higher than the IPO price of ₹ 740. HDB Financial Services IPO opened for subscription on Tuesday, June 24, and closed on Thursday, June 26. HDB Financial Services IPO subscription status on the last bidding day was 16.69 times. The company fixed a price band of ₹ 700 to ₹ 740 per share for its IPO. HDB Financial Services is recognized as the seventh largest diversified retail-centric non-banking financial company (NBFC) in India, with a total gross loan portfolio of ₹ 902.2 billion as of March 31, 2024, among its peers in the NBFC sector, according to the CRISIL Report. The Reserve Bank of India (RBI) categorizes the company as an Upper Layer Non-Banking Financial Company (NBFC-UL). The NBFC offers a wide array of lending products tailored to cater to the growing needs of its customer base through a comprehensive omni-channel distribution network. HDFC Bank owns a 94.3% share in HDB Financial prior to the IPO. According to Tarun Singh, the 13% listing premium strikes a measured note, respectable without being euphoric, much like HDB Financial itself. The market appears to have carefully weighed its dual proposition, the stability of HDFC lineage against the challenges of a maturing NBFC sector. Moving forward, HDB Financial Services ability to translate its parentage into consistent returns will determine whether today's listing proves to be a starting point or a peak. For now, it stands as a thoughtful addition to India's financial services landscape neither revolutionary nor disappointing, but importantly, credible. Prashanth Tapse advises that those who did not receive any allotment may consider accumulating on any post-listing corrections, particularly during short-term volatility triggered by broader market movements. As we see HDB Financial Services offers a value-driven opportunity with both defensive and growth characteristics, best suitable for investors with a 3–5 year investment horizon. Prashanth Tapse, Research Analyst, Mehta Equities Ltd stated that Listing was in line with our expectations, reflecting strong investor appetite. The IPO garnered over ₹ 1.61 lakh crore in bids, underscoring massive institutional and retail interest. This makes HDB's offering the second most subscribed IPO among ₹ 10,000+ crore issues, trailing only the record-breaking Tata Technologies listing. However, it did fall short of surpassing the all-time high ₹ 3 lakh crore+ subscription seen in the Bajaj Housing Finance IPO. Given the healthy listing prevailing bullish sentiment in the market, we recommend holding the stock for the long term, as HDB Financial Services is strategically positioned to benefit from India's structural credit growth, especially within the retail and SME financing segments. According to Bhavik Joshi, Business Head, INVasset PMS, HDB Financial's market debut, though modest with a 12% premium , reinforces the market's calibrated optimism. The strong QIB interest and overall 17x subscription had built expectations of a sharper pop, but the pricing at 3.8x FY25 book likely capped short-term upside. That said, the company's HDFC lineage, granular loan book, and improving asset quality metrics continue to make it a structurally sound NBFC play. In the current rate-easing environment, where cost of funds could gradually soften, HDB's lending spread visibility and low net NPA profile remain its key strengths. The muted retail response during the IPO may reverse over time as earnings stability becomes evident in quarterly prints. Post-listing, the stock may see institutional accumulation on dips, but for long-term investors, this listing is less about day-one pop and more about participating in a high-quality compounder in India's formal credit cycle. The promoter of the company is HDFC Bank Limited. As of the date of this Red Herring Prospectus, the promoter possesses 750,596,670 equity shares with a face value of ₹ 10, representing 94.04% of the company's pre-Offer issued, subscribed, and paid-up equity share capital (on a fully diluted basis). As of the date of this Red Herring Prospectus, the Board consists of nine Directors, including one Executive Director and eight Non-Executive Directors, of which seven are Independent Directors (including two female Independent Directors). The Emkay report highlighted a significant regulatory risk. The draft circular from the RBI released in October 2024 suggests that banks and their subsidiaries should not engage in overlapping business activities. If this is enacted, it could require HDFC Bank to lower its ownership in HDB Financial Services to under 20% within a designated period, which might influence the company's strategic approach. In spite of this challenge, Emkay is confident that HDB Financial Services, with its robust fundamentals, stable leadership, and consistent financial results, is positioned for a gradual increase in market valuation. Brokerage Emkay anticipates that HDB Financial Services will exhibit a 20% compound annual growth rate (CAGR) in assets under management (AUM) and a 27% CAGR in earnings per share (EPS) from FY25 to FY28, fueled by its robust origination network, improved capital adequacy following its IPO, and a favorable interest rate climate. With the Reserve Bank of India (RBI) likely to implement early repo rate reductions, net interest margins (NIMs) are expected to increase, thereby enhancing profitability. The brokerage forecasts that HDB Financial Services will reach return on assets (RoA) and return on equity (RoE) of 2.7% and 17%, respectively, by FY28. The company's significant operating expenses, arising from its direct origination model, are anticipated to be balanced by relatively higher net yields. HDB Financial Services share price made a bumper debut on the bourses today. On NSE and BSE, HDB Financial Services share price opened at ₹ 835 per share, 12.84 % higher than the issue price of ₹ 740. The IPO consists of a fresh issue of ₹ 2,500 crore along with an offer for sale of ₹ 10,000 crore from HDFC Bank. The net proceeds are intended to be used to enhance the company's Tier-I Capital base, allowing them to fulfill future capital needs for their various business segments, including Enterprise Lending, Asset Finance, and Consumer Finance. These needs are anticipated to emerge from the growth of the company's operations and assets, and to maintain adherence to the capital adequacy regulations established by the RBI as they may evolve. Highly granular retail loan book, bolstered by a large and rapidly growing customer base with a focus on serving the underbanked customer segments. Large, diversified and seasoned product portfolio with a sustainable track record of diversification, growth and profitability through the cycles. Tailored sourcing supported by an omni-channel and digitally powered pan-India distribution network. Comprehensive systems and processes contributing to robust credit underwriting and strong collections. Advanced technology tools driving enhanced customer experience and efficiency across each stage of the customer lifecycle. High-quality liability franchise with access to low cost, diversified borrowing sources and the highest credit rating. Distinguished parentage of HDFC Bank, India's largest private bank, enjoying strong trust and brand equity with consumers. According to the red herring prospectus (RHP), the company's competitors include Bajaj Finance Ltd (with a P/E of 34.3), Sundaram Finance Ltd (with a P/E of 28.1), L&T Finance Ltd (with a P/E of 17.9), Mahindra & Mahindra Financial Services Ltd (with a P/E of 14.5), Cholamandalam Investment and Finance Company Ltd (with a P/E of 31.4), and Shriram Finance Ltd (with a P/E of 13.0). According to Bhavik Joshi, Business Head, INVasset PMS, the current grey market premium suggests a potential 9–11% listing pop. That said, post-listing performance will depend on sustained earnings visibility, credit cost control, and how the broader NBFC sector fares in a softening rate cycle. Investors should approach tomorrow's listing with measured optimism, viewing it as a gateway to long-term participation in India's evolving credit ecosystem. Ahead of the share listing of HDB Financial Services today, Emkay Global Financial Services has started coverage on the company with an optimistic outlook, giving it a 'Buy' rating and setting a target price of ₹ 900 per share for June 2026. This suggests a possible gain of 22% from the IPO price. Emkay's positive stance is supported by HDB Financial Services' very diversified and granular lending portfolio, where the top 20 accounts account for only 0.34% of its assets under management (AUM). The firm serves more than 19 million customers and has an extensive geographical presence with 1,770 branches spread across 31 states and union territories. According to Prashanth Tapse, Research Analyst, Mehta Equities Ltd, after years of anticipation, HDB Financial Services is finally set to debut on the Indian stock exchanges, and early indicators point to a healthy 8–10% listing gain, reflecting strong investor appetite. The IPO garnered over ₹ 1.61 lakh crore in bids, underscoring massive institutional and retail interest. This makes HDB's offering the second most subscribed IPO among ₹ 10,000+ crore issues, trailing only the record-breaking Tata Technologies listing. However, it did fall short of surpassing the all-time high ₹ 3 lakh crore+ subscription seen in the Bajaj Housing Finance IPO.
Time of India
2 hours ago
- Business
- Time of India
HDB Financial Services gets Rs 900 target price. Should you buy after 13% listing pop?
Shares of HDFC Bank-backed HDB Financial Services pleased IPO investors with 13% listing gain on Wednesday when domestic brokerage firm Emkay Global also initiated coverage on the stock with a target price of Rs 900. Following its listing at Rs 835, HDB Financial shares moved up another 1% to Rs 845.75 BSE. The IPO garnered over Rs 1.61 lakh crore in bids, but institutional interest was higher than that of retail. While the QIB (qualified institutional buyer) portion was oversubscribed over 55x, retail held back at 1.4x. Overall, the IPO was oversubscribed nearly 17 times. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Mountain Gear for Extreme Conditions Trek Kit India Learn More Undo This made HDB's offering the second most subscribed IPO among Rs 10,000+ crore issues, trailing only the record-breaking Tata Technologies listing. However, it did fall short of surpassing the all-time high of Rs 3 lakh crore subscription seen in Bajaj Housing Finance IPO, Prashanth Tapse of Mehta Equities said. Also Read | HDB Financial Services lists at 12.84% premium, debuts at Rs 835 on BSE, NSE The brokerage has told clients to hold HDB Financial shares for the long term, given that it is strategically positioned to benefit from India's structural credit growth, especially within the retail and SME financing segments. Live Events Emkay initiates coverage on HDB Financial shares Emkay became the first brokerage to initiate coverage on HDB Financial Services with buy call and June 2026 target price of Rs 900 by valuing it at FY27 P/B of 3x. It gave three reasons on its positive view on HDB: 1) HDB Financial is a highly diversified (geographically and product-wise), extremely granular (top 20 accounts constitute ~0.34% of AUM), and large-scale lending franchise with over 19mn customers. It has seen multiple credit cycles, Covid, and built from scratch with a bottom-up approach. 2) Its strategy of focusing on direct sourcing (~82% of FY25 disbursements), remote areas (70% branches are in tier 4 towns and beyond), and low-to-mid-income groups with limited to no credit history has been driven by the skilled top management (most have been in HDBFS for over 10Y), reflecting strong conviction and consistency. 3) With a favorable interest rate cycle amid frontloaded repo rate cuts driving NIM expansion, credit cost moderation, and the growth outlook improving, HDBFS is well positioned to improve profits/growth, to achieve 2.7%/17% RoA/RoE, respectively, by Mar-28, and deliver ~20%/27% AUM/EPS CAGR over FY25-28E.
India Today
3 hours ago
- Business
- India Today
HDB Financials listing: GMP signals premium on market debut. Check here
HDB Financial Services is set to make its stock market debut today, July 2, after a strong response to its initial public offering (IPO).The company's shares will be listed on both the BSE and NSE. HDB Financial Services is a subsidiary of HDFC Bank and its IPO closed on June 27 with nearly 27 times the of its debut, market trends and grey market data suggest that the listing may be positive. In the grey market, HDB Financial shares are reportedly trading at a premium of Rs 75 per share over the issue price. This implies an expected listing price of around Rs 815, which is about 10.14% higher than the IPO price of Rs 740 per analysts are expecting a listing gain in the range of 7% to 10%. Prashanth Tapse, Research Analyst at Mehta Equities Ltd, said that the strong investor demand shows confidence in the company's said, 'HDB Financial Services is finally set to debut on the Indian stock exchanges, and early indicators point to a healthy 8–10% listing gain, reflecting strong investor appetite.'Tapse also mentioned that the IPO attracted bids worth over Rs 1.61 lakh crore, highlighting strong interest from both institutional and retail company is part of the well-known HDFC Group and operates in the non-banking financial company (NBFC) sector. Analysts believe this connection with HDFC adds to investor trust and confidence in its long-term brokerage Emkay Global has also given a positive outlook for the stock. It initiated coverage on HDB Financial Services ahead of its listing, with a target price of Rs 900 per share. This reflects a possible 22% upside from the IPO price. The brokerage cited several reasons for its positive view, including the company's strong reach, large customer base, and a well-diversified business to Emkay, HDB Financial Services is not only geographically spread out but also has a varied product offering. The company's top 20 accounts make up only about 0.34% of its assets under management (AUM), showing how wide its customer base is. The firm has also successfully navigated through difficult credit cycles, including the Covid pandemic, and has built its business steadily over over 1.9 crore customers, HDB Financial Services is seen as a large-scale and stable lending platform in the NBFC space. Experts believe this gives it an edge in India's growing financial services markets open, investors will be watching closely to see how the stock performs in its first day of trading. The grey market premium and strong demand during the IPO suggest a good start, but the final response from the public markets will be revealed once trading begins.- Ends advertisement
