HDB Financial Services IPO

India’s non-banking financial sector is buzzing with excitement as HDB Financial Services, a subsidiary of HDFC Bank, launches its ₹12,500 crore IPO. As one of the largest NBFC IPOs in 2025, it’s drawing attention from investors in Mumbai to Madurai. Backed by HDFC Bank’s trusted brand, HDB’s robust financials and strategic focus make it a compelling opportunity. But is it worth your investment? This blog dives into HDB’s fundamentals, financial performance, key IPO dates, grey market premium (GMP), and a final verdict on whether you should subscribe. For hands-on learning to navigate IPO investments, check out Entri’s Stock Market Course, which includes financial market insights.

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Introduction to HDB Financial Services

Founded in 2007, HDB Financial Services is a leading retail-focused Non-Banking Financial Company (NBFC) in India. It is classified as an Upper Layer NBFC by the RBI. With 1,772 branches across 1,162 towns and 31 states/UTs as of September 2024, HDB serves 17.5 million customers, growing at a 28.22% CAGR since FY22. Its “phygital” model blends 140,000+ retail touchpoints with digital platforms like mobile apps and AI-driven credit scorecards. HDB offers three core verticals: Enterprise Lending (39.85%, MSME loans), Asset Finance (37.36%, vehicle/equipment loans), and Consumer Finance (22.79%, personal loans). It also provides BPO services and insurance distribution, primarily to HDFC Bank.

HDB’s focus on underbanked segments (12.02% of loans to “new to credit” customers) and low concentration (top 20 customers <0.36% of loans) ensures resilience. It is AAA ratings from CRISIL and CARE reflect strong creditworthiness. However, risks like high debt-equity ratios and regulatory mandates to reduce HDFC Bank’s 94.3% stake add complexity. Let’s explore the fundamentals, financials, and IPO details to assess its potential.

HDB Financial Services: Company Fundamentals

HDB’s strengths lie in its diversified portfolio, extensive reach, and technological edge:

• Diversified Loan Book: As of March 2024, HDB’s ₹90,220 crore gross loan book spans Enterprise Lending (39.3%), Asset Finance (38.03%), and Consumer Finance (22.66%). Secured loans (73.01%) reduce risk.

• Pan-India Presence: With 1,772 branches, 80% outside top cities, HDB taps semi-urban and rural demand, partnering with 80+ brands and 140,000 retailers.

• Digital Innovation: Over 95% of loans and collections are digital, using AI/ML scorecards and API-integrated tools for precise underwriting.

• HDFC Bank Backing: The parent’s brand and operational synergies enhance trust and efficiency.

• Asset Quality: GNPA (2.26%) and NNPA (0.99%) as of March 2025 reflect robust credit management.

• Capital Strength: A CRAR of 19.22% and low borrowing cost (7.9%) support growth.

Risks: High debt-equity ratio, potential stake reduction by HDFC Bank (to <20% per RBI rules), and competition from fintechs pose challenges. Some financial advisors flagged the stake reduction as a key concern, as it could impact strategic alignment.

Financial Performance Overview

HDB’s financials show steady growth, though FY25 saw a profit dip:

• Revenue: ₹16,300.28 crore in FY25, up from ₹14,171.12 crore in FY24 and ₹12,402.88 crore in FY23, with a 14.65% CAGR.

• Profit After Tax (PAT): ₹2,175.92 crore in FY25, down from ₹2,460.84 crore in FY24 but up from ₹2,017.86 crore in FY23 (5.38% CAGR). The dip reflects higher provisioning.

• Assets Under Management (AUM): ₹1,07,260 crore as of March 2025, with a 23.71% CAGR since FY23.

• Loan Book: ₹1,06,880 crore in FY25, growing at 23.54% CAGR.

• Key Metrics: ROA (2.16%), ROE (14.72%), P/E ratio (28.15x, competitive vs. peers like Bajaj Finance at 33x).

HDB’s consistent revenue and AUM growth signal scalability, but the PAT decline warrants caution. My friend Priya, a Chennai analyst, noted that HDB’s focus on underbanked segments drives AUM but may strain profitability short-term.

HDB Financial Services IPO: Key Dates and Details

The IPO, valued at ₹12,500 crore, combines a ₹2,500 crore fresh issue and a ₹10,000 crore Offer for Sale (OFS) by HDFC Bank. The fresh proceeds will bolster Tier-I capital for lending growth. Here’s a detailed table:

Investors can apply via UPI/ASBA through platforms like Zerodha, Groww, or Angel One. HDFC Bank shareholders can bid up to ₹2,00,000 in the shareholder quota, making it attractive for loyalists.

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Current Grey Market Premium (GMP)

As of June 24, 2025, HDB’s GMP ranges from ₹80 to ₹110, per multiple sources. At the upper price band (₹740), this suggests a listing price of ₹820–₹850, implying a 10% to 15% listing gain. Market shows strong retail interest, with GMP peaking at ₹93 on June 18 but dipping to ₹80 to 86 recently due to market volatility. The GMP signals positive sentiment, but advisors caution that oversubscription (expected due to HDFC’s brand) may dilute allotments.

Should You Subscribe? 

Let’s check the strengths and weaknesses of the company:

Strengths:

• HDFC Bank Parentage: Enhances trust and operational synergy.

• Diversified Portfolio: Balanced across lending verticals, reducing risk.

• Growth Metrics: 23.71% AUM CAGR and 28.22% customer growth.

• Digital Edge: AI-driven underwriting and 95% digital processes.

• Competitive Valuation: P/E of 28.15x vs. peers like Bajaj Finance (33x).

• GMP: Indicates 10 to 15% listing gains, appealing for short-term investors.

Risks:

• PAT Decline: FY25 profit fell to ₹2,175.92 crore from ₹2,460.84 crore.

• Stake Reduction: RBI’s mandate may disrupt HDFC Bank’s control.

• Competition: Fintechs and NBFCs like Bajaj Finance challenge market share.

• Asset Quality: GNPA (2.26%) could rise with economic slowdowns.

• High Debt: Debt-equity ratio may strain finances if defaults increase.

Verdict: Subscribe for Long-Term and Listing Gains

HDB’s IPO is a strong pick for retail and long-term investors. Its diversified loan book, HDFC backing, and digital prowess position it for growth in India’s ₹50 lakh crore NBFC market. However, the PAT dip and stake reduction risks call for caution. For retail investors, subscribing via the retail or shareholder quota is advisable, but limit exposure to manage oversubscription risks. Want to master investment strategies? Entri’s Stock Market Course offers financial insights alongside marketing skills.

How to Apply for the HDB Financial Services IPO

1. Log into Broker Platform: Use Zerodha, Groww, or Angel One.

2. Select IPO: Choose HDB Financial Services IPO.

3. Enter Lot Size: Minimum 20 shares, multiples thereafter.

4. Provide UPI ID: Link for payment and approve via UPI app.

5. Check Allotment: Visit MUFG Intime’s website on June 30, 2025.

Conclusion

HDB Financial Services’ ₹12,500 crore IPO, launching June 25, 2025, is a landmark event. Its strong fundamentals, HDFC Bank’s backing, and 10 to 15% GMP make it attractive. Despite risks like profit dips and regulatory hurdles, HDB’s growth trajectory suits long-term investors. Stay updated via Entri’s Trading Community for market insights and identify financially strong companies with the Entri Stock Market Course. Monitor GMP and apply early to beat oversubscription. Consult a financial advisor and review the RHP before investing.

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Disclaimer The information provided in this article is for general informational purposes only and is not intended as investment advice, financial guidance, or an offer or solicitation to buy or sell any securities. Stock data and financial figures are sourced from publicly available information and are believed to be accurate at the time of publication; however, we do not guarantee their accuracy or completeness. Readers should conduct their own research or consult a qualified financial advisor before making any investment decisions. The author(s) and the publisher disclaim any liability for any loss or damage arising directly or indirectly from the use of or reliance on the information provided herein.