Business

IIE DIGITAL DESK : June 26, 2025 — HDB Financial Services, the non-banking finance arm of HDFC Bank, continues its ₹12,500 crore initial public offering (IPO) amid a mixed response on the public subscription front, even as anchor investors poured in ₹3,369 crore ahead of the launch .

The IPO, open from June 25–27, comprises a fresh issue worth ₹2,500 crore alongside a ₹10,000 crore offer-for-sale (OFS) from HDFC Bank, which currently holds approximately 94% equity.The shares are offered in the price band of ₹700–₹740, with listing anticipated on both the BSE and NSE on July 2.

The anchor book, closed on June 24, received enthusiastic institutional support, raising ₹3,369 crore ($392 million). Key participants included global funds such as BlackRock, LIC, and Norway’s sovereign wealth fund. LIC alone took approximately 6.5% of the anchor allocation, while domestic mutual funds subscribed to nearly 43% .

As of the second day of bidding toward midday June 26, public subscription lagged. The total issue stood at just 0.67x overall—retail investors at 0.49x, NIIs at 1.46x, QIBs at a mere 0.09x, employees at 2.43x, and shareholders around 1.18x. Other sources reported subscriptions between 0.61x and 0.69x.

In the grey market, the premium (GMP) has softened from roughly 8–10% at IPO launch to around 7%. Today's unofficial trading hovers between ₹55–75, translating to an estimated listing price of ₹790–₹815—approximately 6–10% above the IPO price band .

Concerns are rising over the sharp discrepancy between pre-IPO unlisted valuations—about ₹1,225 per share—and the IPO pricing capped at ₹740. This represents a nearly 40% drop from unlisted peaks, prompting warnings about speculative valuations in the grey market, which have led to fresh investor stress .

Investment advisors emphasize that unlisted stock hype doesn’t always translate post-listing. A seasoned expert noted: “Public, private, or in between, there is a reality of valuations and financial gravity.”.

HDB Financial is India’s seventh-largest retail-focused NBFC by loan book (~₹1.08 lakh crore as of March 2025), with diversified segments including enterprise lending, asset finance, and consumer finance across 1,771 branches—mainly in semi-urban and rural markets.

Brokerages such as SBI Securities, Arihant Capital, and KR Choksey have recommended subscribing. Valuation metrics are attractive, at ~3.2–3.9x FY25 book value, well below peer averages. Strengths include HDFC Bank's backing, robust funding access, and prudent risk management .

This IPO marks India’s largest non-bank lender public offering of 2025 and stands as a critical litmus test for both the NBFC sector and HDFC Bank’s retail finance strategy .However, the combination of subdued public subscription and cooling grey market sentiment suggests investors may be hesitant at the upper limit of the price band.

If the final subscription remains underwhelming and GMP weakens, it could signal a muted listing. On the flip side, a listing at ₹790–₹815—reflecting a 7–10% gain—would still meet many investors' expectations without excessive exuberance. The final allotment date is set for June 30, with listing tentatively on July 2.

The HDB Financial IPO illustrates a dual narrative: strong institutional confidence via anchor subscriptions and cautious retail appetite reflected in lukewarm public bidding and a tempered grey market premium. As investors weigh valuation against fundamentals and comparing past mega IPO disappointments, the final listing performance will determine whether the issue breaks the “mega IPO jinx”