HDB Financial Services Prepares for IPO with Fresh Equity and Offer for Sale

HDB Financials IPO: HDB Financial Services Ltd, a non-banking subsidiary of HDFC Bank, has approved plans for its highly anticipated initial public offering (IPO). The IPO will include a fresh equity issue worth Rs 2,500 crore, along with an offer for sale by existing shareholders, according to a report by Bloomberg.

The offering is expected to launch by December or by the end of the financial year, as reported by Moneycontrol earlier in September, citing anonymous sources.

HDFC Bank’s Valuation Expectations and Stake Sale Plans

HDFC Bank, which currently holds a 94.64 per cent stake in HDB Financial Services, has been actively shortlisting investment bankers for the IPO. Foreign banks like Morgan Stanley, Bank of America, and Nomura have been selected, alongside domestic institutions such as ICICI Securities, Axis Capital, and IIFL.

The bank is seeking a valuation of Rs 78,000-87,000 crore for HDB Financial Services, translating to a price-to-book value of 4.5 to 5 times. Through the IPO, HDFC Bank plans to sell 10-15 per cent of its stake, potentially raising Rs 7,800-8,700 crore. This move will also enhance the bank’s capital adequacy, which stood at 19.3 per cent as of June 2024.

The decision to list HDB Financial Services aligns with the Reserve Bank of India’s mandate from October 2022, which requires large non-banking financial companies (NBFCs) to list on the stock exchanges. The approval follows the successful IPO of Bajaj Housing Finance, which saw its market capitalization exceed Rs 1.4 lakh crore this week.

Should You Apply in HDB Financials IPO

Ongoing IPO season has made money for many but also made losses. Various IPOs are trading below their issue price. IPO’s Like Ola Electric, PN Gadgil Jewellers, and Bajaj Finance listed on 100% and if not doubled while listing they doubled afterwards.

Many of the lists of those IPOs that made losses aren’t concise either. People have lost money in the SME IPO market as well.

Advice: If you wanna go for long-term with this IPO I would say You can go with it otherwise there’s no guarantee that it will double your money like Bajaj Housing Finance or some other shining IPO. The company is good, the business structure cash flow everything is working in the favour. But Now when the market is a time high there’s no guarantee for high listing gains.

Conclusion

Last call Must be Your Take you decision only after consulting Your financial advisor.

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