HDB Financial Services IPO Opens Today: 'Subscribe' Says Centrum Broking — Read Report

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Centrum Broking Report

HDB Financial Services Ltd., a subsidiary of HDFC Bank's IPO opened today for subscription and the offer closes on June 27. The company has fixed the price band in the range of Rs 700 to Rs 740 per share.

The Rs 12,500 crore IPO comprises of fresh issue of Rs 2,500 crore and Rs 10,000 crore through an offer for sale.

Investors can place bids starting from a minimum of 20 shares and in multiples thereafter.

HDB, an NBFC–UL, operates a diversified lending portfolio across Enterprise Lending (39%), Asset Finance (38%), and Consumer Finance (23%), catering to MSMEs, income-generating vehicle loans, and consumer credit segments.

The company primarily serves the underserved and underbanked segments—largely LMH with limited or no formal credit history. As of FY25, over 80% of its 1,771 branches are located outside India’s top 20 cities, with more than 70% situated in Tier-4 and smaller towns.

The loan portfolio is highly granular, with the top 20 customers accounting for less than 0.34% of total gross advances. The average ticket size stood at approximately Rs 1.65 lakh, with the portfolio mix comprising 73% secured and 27% unsecured loans.

On the liabilities side, HDB benefits from a strong, diversified borrowing base, backed by the highest domestic credit ratings (CRISIL AAA/Stable and CARE AAA/Stable).

At the IPO price of Rs 740/share, the issue is valued at <3x FY26E P/ABV, which is at a steep discount to larger peers such as Bajaj Finance and Chola, discounting relatively lower return ratios and growth.

We recommend a Subscribe rating to the issue, supported by:

1. A robust brand franchise and granular retail lending model,

2. A wide-reaching omni-channel (phygital) distribution platform, and

3. Access to low-cost funding anchored by a AAA-rated credit profile.

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