HDB Financial Services shares set for stock market debut. GMP hints at decent gains

Synopsis

HDB Financial Services, backed by HDFC Bank, is set to debut on stock exchanges on July 2, with a strong investor response to its Rs 12,500 crore IPO, subscribed 17.65 times. Analysts attribute the enthusiasm to the company's strong parentage and extensive branch network.

After months of anticipation and a healthy response from investors, HDB Financial Services is finally set to debut on the stock exchanges on July 2. Backed by HDFC Bank, the non-banking financial company (NBFC) is poised to enter the secondary market amid strong demand and a GMP of Rs 71 – indicating a likely 9.6% listing pop over the issue price of Rs 740 per share.

The Rs 12,500 crore IPO, comprising a fresh issue of Rs 2,500 crore and an offer-for-sale of Rs 10,000 crore, closed on June 27 with overwhelming demand. The issue was subscribed 17.65 times overall, led by Qualified Institutional Buyers (QIBs) who subscribed their portion 31.73 times.

Despite broader market volatility, investor interest was undeterred. Analysts attribute the enthusiasm to the company’s strong parentage, its granular loan book across retail, SME, and asset finance segments, and its extensive phygital footprint of over 1,700 branches across India – more than 80% of them outside the top 20 cities.

Prashanth Tapse, Senior VP at Mehta Equities, said the strong subscription and premium in the grey market reaffirm confidence in HDB’s business model and growth outlook.

“It shows investors are willing to bet on legacy-backed financial services plays with clear visibility. Long-term growth potential in India’s NBFC space, especially in underpenetrated retail and SME lending, makes HDB an attractive proposition,” he said.

The IPO drew over Rs 1.61 lakh crore in bids, making it the second-most subscribed large IPO (over Rs 10,000 crore), after Tata Technologies. Although it didn’t match Bajaj Housing Finance’s record Rs 3 lakh crore+ bids, it still outpaced recent NBFC listings in terms of demand.

At the upper end of the price band, HDB Financial is valued at a P/E of 28.15x based on FY25 earnings. The implied market cap is around Rs 61,253 crore. With a GMP of Rs 71, the expected listing price could hover around Rs 811.

For those allotted shares, analysts recommend holding the stock for the medium to long term. For investors who missed out, dips post-listing could offer attractive entry opportunities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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