Business

IIE DIGITAL DESK : HDB Financial Services, the non-banking financial arm of HDFC Bank, enjoyed a strong debut on the bourses. The stock listed at ₹835 on both BSE and NSE—reflecting a 12.84% premium over its ₹740 IPO price—and spiked to ₹845.75, marking a solid 13–14% gain on the first day of trading .

The ₹12,500 crore IPO drew overwhelming interest—with a total subscription of approximately 17 times. Institutional investors (QIBs) dominated, subscribing over 55 times their segment, while retail investors participated at a more modest 1.4 times .This high QIB participation signal strong confidence in HDB's long-term financial fundamentals.

Domestic brokerage Emkay Global initiated coverage following the listing, rating the stock a ‘Buy’ and assigning a June-2026 target price of ₹900. Their valuation is based on a Price-to-Book multiple of 3× projected FY 27 estimates. Emkay highlighted:

1. A diversified and resilient franchise serving 19 million customers.

2. Proven crisis management across credit cycles since 2007.

3. A direct sourcing model in Tier 2–4 regions, tapping underserved borrower segments .

Analysts from Mehta Equities and Mint recommend a medium- to long-term hold—citing HDB’s balanced mix of defensive and growth characteristics. With India’s NBFC sector poised for expansion, the company’s return on assets (2.7%), equity (17%), and projected 20% AUM and 27% EPS CAGRs through FY28 are seen as robust growth indicators .

Built on a granular risk strategy, HDB Financial's CEO G Ramesh emphasized calibrating growth against India’s real-time economic pulse. The lender leverages an extensive branch network—80% situated beyond Tier 2 towns—and a granular, bottom-up underwriting strategy to manage cyclical risks .

• Holders: Recommended to retain the stock for 3–5 years based on strong fundamentals and market positioning.

• Retail-inexperienced investors: Advised to accumulate on any dips in price post listing or during broad market volatility .

• Watch out for triggers: Growth outlook will hinge on factors like repo rate movement, NBFC credit expansion, and possible stake reduction by HDFC Bank due to RBI mandates in future.

With strong institutional backing, credible parentage, and a resilient business model, HDB Financial's debut underscores investor faith in India’s mid-tier lending growth story. The ₹900 target presents a solid upside from current levels, but investors should stay attentive to broader macro dynamics and sector-specific developments.

Interested in a deeper comparison with peer NBFCs, or how RBI’s policy shifts might impact future performance?