HDB Financial Services Achieves 8th Position Among NBFCs After IPO

HDB Financial Services made a noteworthy debut on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on July 2, 2025, after its initial public offering (IPO) successfully raised ₹12,500 crore. The IPO, which was opened for bidding from June 25 to June 27, attracted significant interest, leading to an oversubscription of 16.69 times, indicating robust demand from both institutional and retail investors. When the shares were listed, they opened at ₹835, reflecting a premium of 13% over the issue price of ₹740, marking it as one of the most anticipated listings in recent times.

HDB Financial Services, a subsidiary of HDFC Bank, stands as the eighth most valuable non-banking financial company (NBFC) in India by market capitalization, joining an elite group of financial institutions that include Bajaj Finance and Jio Financial Services. The company's rapid ascent in the market is attributed largely to its diverse product portfolio and strong backing from HDFC Bank, which remains the largest private lender in India.

According to Prashanth Tapse, Senior Vice President of Research at Mehta Equities, "The overwhelming demand for the IPO was driven by its reasonable valuation and healthy long-term upside potential. Investors showed confidence in HDB’s business model, particularly given its parentage from HDFC, which is known for its stability and growth prospects in the financial sector."

The IPO comprised a combination of fresh issuance of shares valued at ₹2,500 crore and an offer for sale of ₹10,000 crore worth of existing shares. The listing on both exchanges saw HDB Financial’s shares trading at ₹848.95 on the BSE, marking an increase of 1.7% within the first few hours of trading. This positive reception underscores a broader trend of investor confidence in high-quality financial services, especially in light of the company’s strong performance metrics, including a gross loan book of ₹98,620 crore and a net profit of ₹2,460.8 crore for the fiscal year 2024.

Industry experts highlight that HDB Financial's business model includes three key segments: Enterprise Lending, Asset Finance, and Consumer Finance, catering to a diverse clientele including small businesses and individual consumers. According to Deven Choksey, a financial analyst, "The company's growth trajectory is poised to continue, particularly given the supportive measures from the Reserve Bank of India (RBI) aimed at enhancing liquidity and boosting financial services for SMEs."

Despite the enthusiasm surrounding HDB Financial's IPO, potential challenges loom on the horizon. Regulatory changes proposed by the RBI may require HDFC Bank to reduce its stake in HDB Financial below 20%, which could impact the subsidiary’s operational strategy and capital structure. As emphasized by the brokerage firm Emkay, adherence to such regulations is crucial for maintaining stability and growth in a competitive landscape.

Looking ahead, analysts remain optimistic about HDB Financial’s growth potential, projecting a return on assets (ROA) of 3.03% and a return on equity (ROE) of 19.55%. The company’s strong asset quality, with gross non-performing assets (NPAs) at 1.90% and net NPAs at 0.63%, suggests sound risk management practices. Given these factors, HDB Financial Services is well-positioned to capitalize on the growing demand for financial services in India's evolving economic landscape.

In conclusion, HDB Financial's IPO not only reflects investor confidence in the company but also sets a promising precedent for future listings in the Indian financial sector. As the company navigates potential regulatory challenges and market dynamics, its ability to adapt and innovate will be critical in sustaining its growth trajectory and enhancing shareholder value.