HDB Financial Services IPO: Key Points on HDFC Bank’s NBFC Arm’s Stock Market Debut - Read Now 

One of the major non-banking financial subsidiaries (NBFC) of HDFC Bank is all set to enter the stock market in the name of HDB Financial Services. The company has lately filed preliminary documents with SEBI for its initial public offering (IPO). The IPO includes both the fresh issue of equity shares and an Offer-for-Sale (OFS). Here's a closer look at the essential details that investors need to know about the HDB Financial Services IPO.

1. Major IPO from HDFC Bank's NBFC arm
HDB Financial Services has been catering to both retail and commercial clients and offers loan products like personal loans, vehicle loans, and loans against property. Being a subsidiary of India's largest private sector bank, HDFC Bank, HDB Financial is very well-positioned in the market and is eagerly awaited by investors as it readies itself for its IPO.

2. Issue Size and Structure
HDB Financial IPO will raise a total of Rs 12,500 crores in the primary market. The issue involves an issue of fresh equity amounting to Rs 2,500 crores and an Offer-for-Sale of Rs 10,000 crores of HDFC Bank, that presently owns 94.36% of HDB Financial. This IPO, though, would leave HDB Financial to be under the wing of HDFC Bank as its subsidiary.
Aims and Utilisation of Proceeds
Proceeds from the fresh issue will be utilized to boost the Tier-I capital base of the company, critical in supporting future capital requirement and sustaining a healthy growth path. This will come in very handy as the NBFC looks to satisfy rising loan demands across the segments.

4. Compliances with RBI Mandate
HDB Financial Services is launching an IPO as mandated by the Reserve Bank of India in October 2022. RBI has stated that NBFCs classified in the 'upper layer' are supposed to be listed on the stock exchanges within three years. The IPO will aid HDB Financial in this regard while improving its market reach.

5. Financial Performance and Valuation
HDB Financial is likely to see its valuation between Rs 78,000 crore and Rs 87,000 crore, with a price-to-book value of about 4.5 to 5 times. The company's financials indicate high growth: In FY23, HDB's loan book grew by 17% year-on-year at Rs 66,000 crore. Revenue from operations in FY24 rose to Rs 14,171 crore while net profit rose to Rs 2,460 crore from Rs 1,959 crore in FY23.

6. IPO Underwriters
Leading financial institutions appointed as the book running lead managers to the issue are JM Financial, BNP Paribas, BofA Securities India, Goldman Sachs (India) Securities, and HSBC Securities.

7. Net Worth as of Date and the Impact on the Market
The HDB Financial Services, in June 2024, reported having a net worth of Rs 13,300 crores, which explains that its financial strength along with being market-ready for investments in the IPO, are in high demand by the investor community. Hence, an IPO in Indian can very well be touted to have been one of the key highlights of the year for the IPO market in the Indian context.

This IPO is HDFC Bank's strategic foray into the growing NBFC segment in India to comply with RBI's regulatory requirement. Investors eagerly look forward to this IPO as HDB Financial has a strong market position and sound financials that could add value to their portfolios.

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