India's HDB Financial IPO pricing not influenced by 70% premium in 'grey market', bankers say
MUMBAI, June 20 (Reuters) - The initial public offering of India's HDB Financial has been priced based on the fundamentals of the business, unaffected by the roughly 70% premium the stock is trading at in the informal 'grey market' for unlisted securities, bankers said on Friday.
Shares in the lender will be sold in a price band of 700 rupees to 740 rupees per share ($8.06-$8.52), valuing HDB Financial at $7.1 billion at the upper end of the band. The shares were traded around 1,200 rupees to 1,250 rupees in the 'grey market'.
"This price has been determined basis extensive roadshows," said Jibi Jacob, head of equity capital markets at Jefferies India, one of the bankers to the issue.
"We have no influence on what is happening on the unlisted side," Jacob said at a press conference in Mumbai.
HDB Financial's IPO, the largest for an Indian non-banking financial company, opens for subscription on June 25, with large institutions bidding a day earlier.
The firm, which lends across segments such as personal and business loans, operates 1,747 branches nationwide. India's largest private lender, HDFC Bank (HDBK.NS), opens new tab, holds a 94% stake in the firm.
The IPO pricing has been determined on the fundamentals of the franchise and how key peers are trading, said Sonia DasGupta, head of the investment banking division at JM Financial, another banker to the issue.
At 740 rupees per share, the price-to-book ratio, a key measure of valuation, works out to 3.72 for HDB, in line with peers such as Bajaj Finance (BJFN.NS), opens new tab and Shriram Finance (SHMF.NS), opens new tab.
India's red-hot IPO streak has cooled in 2025, following a blockbuster year in 2024 that saw record capital raised through new listings.
So far this year, nearly 100 firms have hit the market, raising about $4 billion, a decline from the 137 IPOs and $4.3 billion fundraise in the year-ago period, according to data compiled by LSEG.
Analysts attribute tepid retail investor demand to aggressive IPO pricing, as the Nifty 50 (.NSEI), opens new tab trades nearly 6% below its record high from last September.
The bull run in Indian markets post the COVID-19 crisis led to valuations of unlisted firms inflating beyond fundamentals, said Arun Kejriwal, founder of Kejriwal Research and Investment Services.
"HDB's approach is a timely reminder that IPO pricing should be grounded in reality, not speculative hype," Kejriwal said.
($1 = 86.6040 Indian rupees)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
2 hours ago
- Reuters
India rate panel hopes to boost consumption, investment with large rate cut, minutes show
MUMBAI, June 20 (Reuters) - A big rate cut would assure stakeholders of India's focus on economic growth and aid in faster transmission while boosting investment and consumption, members of the monetary policy committee wrote in the June policy minutes published on Friday. Two weeks ago, the Reserve Bank of India cut its key repo rate by a larger-than-expected 50 basis points and slashed the reserve ratio for banks. It also changed its monetary policy stance to "neutral" from "accommodative", stating that room for further cuts was limited. "It is expected that the front-loaded rate action, along with certainty on the liquidity front, would send a clear signal to the economic agents, thereby supporting consumption and investment through lower cost of borrowing," RBI Governor Sanjay Malhotra wrote. All six members of the committee concurred that the fall in inflation in recent months had opened up policy space to support growth. However, only one of them - external member Saugata Bhattacharya - argued for pacing the rate cuts. "Continuing elevated uncertainty remains, to my mind, the primary reason to exercise caution in pacing monetary policy easing," wrote Bhattacharya, who voted for a 25-bp reduction. The RBI's assurance of continuing large durable liquidity support is likely to have a more dominant effect on further monetary transmission compared to a deep cut in the repo rate, he added. Retail inflation fell to 2.82% in May, the lowest in more than six years, staying below the central bank's 4% target for the fourth straight month as food prices eased. It is expected to largely remain subdued during the year. "..as monetary policy works with a lag, under the current circumstances, a 50-bp cut is preferable to two 25-bp cuts for faster and greater transmission," executive director and MPC member Rajiv Ranjan wrote in his minutes. Despite being one of the fastest-growing large economies, India can grow faster based on favourable demographics, conducive shift in regulatory policies, significant infrastructure enhancement, and leveraging on the macroeconomic stability achieved during the past decade, said RBI Deputy Governor Poonam Gupta, who was part of the MPC for the first time.
Reuters
2 hours ago
- Reuters
Discounts deepen on Iranian oil in China as struggling teapots slow buying
SINGAPORE, June 20 (Reuters) - Sellers of Iranian oil to China are offering deeper discounts this month as they look to reduce inventories and as independent refiners slow their buying due to a jump in crude prices, traders and analysts said. Iranian Light crude oil is being traded at $3.30-$3.50 a barrel below ICE Brent for July deliveries, compared to a discount of around $2.50 for June, three traders said. Independent refineries, known as teapots, are the main Chinese buyers of Iranian crude. They are currently being squeezed by a $10 a barrel surge in crude prices since the Israel-Iran conflict began last week. Teapots in refining hub Shandong province are incurring their deepest losses this year, traders said. Consultancy Sublime China Information estimates average losses at 353 yuan ($49.15) per metric ton this week. Shandong refinery operations remained low at 51% of capacity as of June 18, down from 64% a year earlier, Sublime data showed. STORAGE RISING Meanwhile, stocks of Iranian oil, including in Chinese storage, in tankers near and off Chinese ports awaiting discharge, and in floating storage near Malaysia and Singapore, amount to roughly 70 million barrels, according to analytics firm Vortexa. That is enough for two months' demand for Iranian oil from China, the biggest buyer. Data from tanker tracker Kpler points to a stockbuild of more than 30 million barrels this year in floating storage. Both Kpler and Vortexa estimate total Iranian oil on the water, including floating storage, at nearly 120 million barrels, the most since at least 2023. Recent U.S. sanctions on three Chinese teapots curtailed buying from several mid-sized independents worried about being designated, Reuters has reported. One trader estimated the volume of Iranian supply to China replaced by non-sanctioned barrels at 100,000 barrels per day in the first half of 2025 - a fraction of the 1.4-1.5 million bpd of Iranian oil being delivered to China. ($1 = 7.1819 Chinese yuan renminbi)
Reuters
2 hours ago
- Reuters
UAE stocks bounce back amid hopes of regional de-escalation
June 20 (Reuters) - Stock exchanges in the United Arab Emirates rebounded on Friday, buoyed by hopes of a potential de-escalation in regional tensions. Investor sentiment improved following European efforts to bring Tehran back to the negotiating table and a pause in U.S. involvement in the Middle East conflict. The White House said on Thursday that President Donald Trump would decide on "whether or not to go" with U.S. involvement in the conflict in the next two weeks, citing the possibility of negotiations involving Iran in the near future. Dubai's main index (.DFMGI), opens new tab snapped a three-day losing streak, rising 1.6%, driven by gains in real estate and materials sector stocks. Among the top performers, Dubai's developer Emaar Properties ( opens new tab jumped 1.2%, while state-owned Parkin Company ( opens new tab advanced 4.8%. Separately, UAE created a new ministry of foreign trade, and appointed Thani al Zeyoudi as its minister, the United Arab Emirates prime minister and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum said in a post on X on Friday. Abu Dhabi's benchmark index (.FTFADGI) also rebounded, gaining 1% after three consecutive sessions of losses. First Abu Dhabi Bank ( opens new tab rose 2.7%, while Adnoc Gas ( opens new tab advanced 2.5%. Real estate developer Aldar Properties ( opens new tab gained 4.5% after reporting over AED 3.5 billion in sales at its Fahid Beach Residences and The Beach House projects. Despite Friday's gains, Dubai's index posted a second consecutive weekly loss, down 0.2% after nine straight weeks of gains. Abu Dhabi mirrored the trend with a 0.5% weekly decline, according to LSEG data. Meanwhile, oil prices — a key driver of Gulf financial markets — fell 2.3% to $77.04 per barrel as of 11:40 GMT.
