HDB Financial sets Rs 700–740 price band for Rs 12,500-crore IPO
MUMBAI: HDB Financial Services, a retail-focused NBFC owned by HDFC Bank, has set a price band of Rs 700–740 for its Rs 12,500-crore IPO, marking a steep premium over face value but a sharp discount to grey market rates.
At the upper end of the price band, the company will be valued at USD 7.5 billion, compared to the grey market valuation of USD 10.5 billion. The mega issue, the largest from the NBFC space, comprises a Rs 2,500 crore fresh issue of shares of Rs 10 face value and Rs 10,000 crore in offer-for-sale by parent HDFC Bank, which currently holds 94.3% of the company. The remaining 5.7% shares are held by the employees trust and employees through ESOPs, Chief Financial Officer Jaykumar Shah told TNIE at the press meet announcing the issue.
Post-issue, HDFC Bank will continue to hold 75% of the equity. HDB Financial, founded in 2008, has been growing rapidly. In FY25, its loan book, 73% of which is secured, crossed the Rs 1-trillion mark, from which it earned a net income of Rs 2,180 crore, up 29% from the previous fiscal.
However, asset quality remains a concern, with gross NPAs at 2.3% and net NPAs at 1% of assets. The IPO is also intended to comply with the RBI's October 2022 directive requiring large NBFCs to go public by September 2025.
When asked about launching the IPO during a choppy market and at a discount to the grey market price, CEO Ramesh Ganesh said the valuation was arrived at after discussions with investors and bankers.
'We've been doing roadshows for quite some time now, meeting investors globally and locally. We believe the value is derived by talking to investors and bankers, and we worked with them to arrive at the value,' Ramesh said.
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