HDB Financial IPO: Unlisted Shares Rally 30% In A Month Ahead Of SEBI Approval
Unlisted shares of HDB Financial Services, the HDFC Bank arm providing a range of loans, have seen a notable upswing, rising by over 30% in the past month ahead of regulatory clearances for its initial public offering.
The Securities and Exchange Board of India gave its approval to the IPO on June 3, 2025.
The market regulator issued its observation letter, which in SEBI parlance means final approval, on May 28.
Over the past year, as per reports, HDB Financial Services' unlisted stock has grown by 17.5%. While the monthly surge has been striking, the six-month performance remains modest, reflecting just about a 2% increase.
HDB Financial Services IPO Details
HDB Financial Services submitted its Draft Red Herring Prospectus (DRHP) in October 2024, aiming to raise up to Rs 12,500 crore from the primary market. The offer includes both a fresh issue and an offer-for-sale (OFS) component.
The company plans to issue fresh shares worth Rs 2,500 crore, with a face value of Rs 10 each, while promoter HDFC Bank is expected to offload shares worth Rs 10,000 crore.
HDFC Bank currently holds a 94.6% stake in HDB Financial Services. Following the IPO, HDB Financial Services will remain a subsidiary of the bank.
HDB Financial is pursuing the IPO to comply with the Reserve Bank of India's October 2022 directive, which mandates large non-banking financial companies (NBFCs) to be listed by September 2025.
When HDB Financial Services filed its DRHP, the company reported a gross loan book of Rs 98,620 crore as of Sept. 30, 2024, marking a compound annual growth rate (CAGR) of 20.93% over the two years leading up to 2024. The company's assets under management stood at Rs 90,230 crore as of March 2024, according to disclosures in the DRHP.
HDB Financial's March Quarter Performance
For the March 2025 quarter, HDB Financial posted a 19% decline in net profit year-on-year to Rs 531 crore on a standalone basis, though it rose 12% sequentially. Revenue from operations grew 16% YoY to Rs 4,266 crore, with interest income increasing 18% to Rs 3,623 crore. Despite a Rs 60 crore income tax credit, net profit fell due to a 28% surge in expenses, which reached Rs 3,562 crore.
Use Of Proceeds
HDB Financial Services plans to use the funds raised from the fresh issue of shares to cover a portion of the IPO expenses. The majority of the proceeds will be used to strengthen its Tier I capital base, supporting future capital needs and expanding lending as the business grows, according to the DRHP. Additionally, the NBFC may explore a pre-IPO placement after discussions with the lead book-running managers, if they decide to pursue this option.
HDFC Bank Stock Performance
Over the past five days, HDFC Bank's shares have gained slightly by 0.24%, while the one-month period saw a modest decline of 0.33%. Looking at a longer horizon, the bank's stock gained 4.07% over six months and delivered a year-to-date return of 8.97%. Over the past year, HDFC Bank's shares have risen by 24.12%.
On Wednesday, June 4, HDFC Bank's shares rallied up to 0.69% to hit an intraday high of Rs 1,938 apiece on the NSE, following SEBI's approval for HDB Financial Services to launch an IPO. However, the stock pared some of its early gains to trade 0.59% higher at Rs 1,935.9 apiece on the NSE at around 11:10 am, compared to a 0.19% rise in the benchmark Nifty 50 at 24,588.1.
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