HDB Financial IPO will open on June 25: Price band, release size, key details; should you apply?

HDB Financial IPO: HDB Financial Services’ Initial Public Offer (IPO) is a non-bank financial subsidiary of HDFC Bank and will open on Wednesday, June 25, 2025. The company has banded the price between Rs 700 to Rs 740 per share, with a value of Rs 10 to Rs 10 per share. The public offering will end on Friday, June 27, 2025.

The IPO includes a new stock with a total share of Rs 25 billion, and an offer of Rs 1 billion (OFS) from HDFC Bank. After HDFC Bank, it will dilute a portion of the company’s 94.36% stake in the company while maintaining management controls.

What should investors do?

Analysts at domestic brokerage firms have conducted research on the company and suggested what investors should do:

SBI Securities recommends subscribing to the issue at a cutoff price. The broker said the company is well suited to register for healthy growth while witnessing improvements in asset quality.

Canara Bank Securities advises investors to subscribe to IPOs, citing that despite valuation issues, NBFC’s strong brand, stable finance, rural coverage and niche positioning offer potential for long-term investors.

Sharekhan analysts expect healthy listing gains and maintain confidence from a medium to long term perspective. According to the broker, the powerful parenting and smaller size provide a long runway for growth compared to its core peer (Bajaj Finance).

“In addition, the favorable macro environment will face headwinds in areas close to medium term,” said Sharekhan analysts.

Similarly, Choice Broking analysts have a “subscribe” rating on the issue, thanks to a strong brand franchise and
Granular retail loan model, extensive omni-channel distribution platform, and low-cost funds based on AAA rated credit profiles.

Here are other details about the IPO:

HDB Financial IPO: Important Date

HDB Financial IPO Distribution: Expected on June 30

HDB Financial IPO Refund: Expected on July 1

HDB Financial IPO Listing Date on NSE & BSE: It is expected to obtain regulatory approval on July 2

Company Advantages

• Large customer base: As of September 30, 2024, the company has provided small loans to 17.5 million customers. This number has grown by about 28.2% per year since March 2022.
• Strong risk management: About 4,500 people focused only on approving and collecting loans. They work separately from the sales team to maintain discipline.
• HDFC Bank support: It is part of India’s largest private bank HDFC Bank (assets of Rs 36.88 trillion as of September 30, 2024), providing it with a strong brand name and reliable support.

Risks to consider

• Economic slowdown: If India’s economy slows down, it could affect businesses and loan repayments.
• Loan default: More and more people fail to repay their loans, especially unsecured loans, which can hurt incomes.
• High unsecured loans: A large portion of the loans are unsecured and difficult to collect.
• Reliance on HDFC Bank: A serious reliance on HDFC banks can create conflicts. If HDFC reduces its stake, it may affect the business.
• Interest rate changes: Volatile interest rates can reduce the profits of loans.
• Fierce competition: More and more competition may make it more difficult to grow or stay profitable.

How to use money

The funds raised from the new problem will be used to strengthen the company’s Tier 1 capital. This will support future loans and help meet the RBI rules of NBFC listed above.