Surge in HDB Financial Shares Ahead of IPO Launch by HDFC Bank Unit

HDB Financial Services shares have seen a significant uptick in the unlisted market ahead of their initial public offering (IPO). The HDFC Bank subsidiary recently filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in October, sparking a sharp rise in the company’s unlisted share prices.

Currently trading at ₹1,295 per share in the unlisted market, HDB Financial shares saw a peak of ₹1,450 around October 20. Despite a slight cooling, the shares remain above the ₹1,000 mark, indicating sustained investor interest.

HDFC Bank is aiming for a valuation of ₹78,000-87,000 crore for HDB Financial, which translates to an estimated price-to-book value of 4.5 to 5 times. The company plans to raise ₹12,500 crore in the primary market to bolster its Tier-I capital base and support future growth needs.

This move to go public follows a mandate from the Reserve Bank of India in October 2022, requiring upper-layer non-banking financial companies (NBFCs) to list on stock exchanges within three years. HDB Financial Services will remain a subsidiary of HDFC Bank, ensuring regulatory compliance.

In FY23, HDB Financial's loan book grew by 17% year-on-year to reach ₹66,000 crore, driven by robust demand for personal, vehicle, and small business loans. For the fiscal year 2023-24, the company’s revenue from operations increased to ₹14,171 crore from ₹12,402 crore the previous year, with profits rising to ₹2,460 crore from ₹1,959 crore in FY23.

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