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HDFC Bank has set the ball rolling for the much-anticipated initial public offering of its subsidiary HDB Financial Services. The country's largest lender by market capitalization intends to schedule the launch of the share sale in its financial services arm in the last quarter of calendar 2024 or the first quarter of 2025, said sources familiar with the development.

HDFC Bank gears up to list NBFC arm HDB Financial

HDB Financial Services, a subsidiary of HDFC Bank, is planning to raise about Rs 2,500 crore of debt capital to support business growth. The subordinated debt is to the tune of Rs 2,000 crore while perpetual debt is nearly Rs 500 crore. After witnessing asset quality pressures in the aftermath of the Covid-19 pandemic, the finance company has improved its risk profile and health to support sustained growth in loan book.

HDB Fin Services to raise Rs 2,500 crore via debt capital for biz growth

As HDB Financial Services heads for its initial public offering (IPO), shares of the nonbank lender owned by the country’s most-valued bank in the unlisted market have seen a sharp rise — up to ₹1,200 apiece. After the IPO plan was announced, the shares rose to a high of ₹1,400 apiece before settling at ₹1,200. However, brokers in the unlisted market say the euphoria is not justified as they expect the IPO to be priced around ₹750-₹800.

IPO-bound HDB Financial stock soars in unlisted market

Though moderate, the company’s asset quality metrics have been improving primarily on account of augmentation in the collection efficiency which resulted in reduction in NPAs by ₹3,144 crore (P.Y. ₹4,265 crore) on account of which its gross non-performing assets (GNPA) and net non-performing assets (NNPA) as on March 31, 2024, declined to 1.90% and 0.63% as compared to 2.73% and 0.97% as on March 31, 2023. As on September 30, 2024, GNPA and NNPA stood at 2.10% and 0.83%. Within the retail portfolio, the company has exposure towards relatively riskier asset classes, considering the vulnerability of borrowers' cashflows to economic shocks.

The issuer has made timely interest payments.

Mr. G. Ramesh, MD and CEO	

Mr. Arijit Basu, Chairman

By virtue of being a subsidiary of HBL, HDBFS benefits from strategic importance and expectation of continued support from its parent HBL. HBL is the largest private sector bank in India with standalone total assets of ₹36,88,065 crore as on September 30, 2024, and has been identified as Domestic Systemically Important Bank (DSIB) by the Reserve Bank of India. HDBFS has strong linkages with HBL in terms of sharing brand name and logo which enhances its financial flexibility. HBL also provides strategic oversight with representations on board and crucial committees.

HDBFS is one of the leading players in the retail financing space with a diversified loan book having 75:25 mix of secured and unsecured businesses. Demand for credit in the retail segment has indeed been strong, contributing to significant growth in disbursement which grew at a compound annual growth rate (CAGR) of 20% over the last three years. As on March 31, 2024, asset-backed loans (primarily comprising PV, CV and CE) continued to account.

HDBFS disbursements grew by 48% y-o-y in FY24. Backed by higher disbursements, the company’s AUM increased from ₹70,084 crore as on March 31, 2023 to ₹90,235 crore as on March 31, 2024.


Security Name: 8.04% HDB Financial Services Limited 25 Feb 2026

ISIN:

INE756I07EL8

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Recent News

HDFC Bank gears up to list NBFC arm HDB Financial

HDB Fin Services to raise Rs 2,500 crore via debt capital for biz growth

IPO-bound HDB Financial stock soars in unlisted market

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