HDB Financial Services Ltd’s initial public offering opened to a lukewarm response on its first day, with the issue receiving subscriptions worth only 0.27 times the total offer as of 2.51 pm today. The three-day IPO, which runs from June 25-27, 2025, aims to raise funds through an offer of 13.04 crore shares.

The employee category emerged as the sole bright spot, achieving 1.35 times oversubscription with 3.86 lakh shares bid against 2.85 lakh shares reserved. However, other investor segments remained tepid. Retail Individual Investors subscribed to only 0.25 times their allocated portion, while Non-Institutional Investors managed 0.50 times subscription. The Qualified Institutional Buyers category showed minimal interest with nearly zero subscription at 0.00 times.

Among Non-Institutional Investors, those bidding between ₹2-10 lakh showed marginally better response at 0.54 times compared to those bidding above ₹10 lakh at 0.48 times. The shareholders category achieved 0.51 times subscription.

HDB Financial Services, a subsidiary of HDFC Bank, is India’s second-largest non-banking financial company. The company primarily serves underserved customers in low to middle-income households, with 80 per cent of its branches located outside India’s 20 largest cities and over 70 per cent in Tier 4+ towns.

Analysts presented mixed views on the offering. Rajan Shinde of Mehta Equities recommended a “Subscribe” rating, citing the company’s strong parentage, diversified loan portfolio, and positioning to benefit from India’s financial inclusion drive. He noted the company’s 14.3 per cent revenue growth in FY2024 and extensive distribution network of 1,771 branches serving over 19 million customers.

However, Mirae Asset Capital Markets expressed caution, stating the issue appears “fully priced” at the upper band of ₹740 per share, which values the company at a price-to-book ratio of 3.5 times. They highlighted concerns over the company’s higher cost-to-income ratio exceeding 40 per cent and reduced provision coverage ratio of 56 per cent in FY2025 compared to 67 per cent in FY2024.

The company’s assets under management grew at 24 per cent CAGR over FY2023-FY2025, while maintaining gross non-performing assets at 2.26 per cent and generating return on equity of 14.7 per cent in FY2025.

More Like This

Published on June 25, 2025