Mumbai: Shares of HDB Financial Services Ltd. soared on their debut at the Bombay Stock Exchange on Wednesday, following a highly successful ₹125 billion ($1.5 billion) initial public offering (IPO) — the largest in India so far this year.
The stock opened strong and rose as high as ₹849.85, marking a nearly 15% gain over its IPO price of ₹740 per share. HDB is a non-banking financial company (NBFC) and a subsidiary of HDFC Bank Ltd., India’s largest private lender.
The offering attracted significant interest from both foreign and domestic investors, including Morgan Stanley, Allianz SE, and Life Insurance Corporation of India. In total, the IPO was oversubscribed more than 15 times, underscoring investor confidence in the company and the sector.
This listing is India’s largest IPO since Hyundai Motor India Ltd.’s $3.3 billion debut in October, and comes amid renewed momentum in institutional placements and public listings after a quieter period following 2024’s market highs.
India’s booming $5.4 trillion stock market, fueled by foreign inflows, has been pushing benchmark indices toward record highs. Analysts suggest that HDB’s robust listing could set the tone for other big-ticket IPOs expected later this year, such as Tata Capital Ltd. and the Indian unit of LG Electronics Inc.
Role of Shadow Lenders
As a shadow lender, HDB caters to borrowers typically underserved by traditional banks — often due to limited credit history or lower income levels — making companies like it vital in India’s financial ecosystem.
The Reserve Bank of India’s recent monetary policy moves, including interest rate cuts and liquidity support, have created a favorable environment for NBFCs. “There will be investor interest because of HDB’s asset size and parentage. It’s a strong brand play,” said Rajnath Yadav, analyst at Choice Equity Broking Pvt. He noted that policy tailwinds could further boost shadow lenders like HDB.
Attractive Valuation
HDB holds a loan book of nearly $12 billion, operates over 1,700 branches, and employs around 90,000 people, according to its IPO filing.
Rajiv Mehta, an analyst at Yes Securities India Ltd., said the IPO valuation appeared “palatable,” making it an attractive opportunity for investors. The shares were priced at roughly 3.4 times book value on a trailing 12-month basis — a discount compared to peers like:
- Cholamandalam Investment and Finance Co. (5.7x),
- Bajaj Finance Ltd. (6x), and
- Sundaram Finance Ltd. (4x+),
according to Bloomberg data.
Backed by Major Investment Banks
A consortium of 12 investment banks helped structure and manage the HDB IPO, including BNP Paribas SA, JM Financial Ltd., and Bank of America Corp.
The successful listing underscores investor optimism in India’s financial sector and highlights the growing appetite for quality offerings amid a bullish market environment.
