Invest In HDB Financial Services IPO ? 10 Best Insights

HDB Financial Services IPO, HDB Financial Services IPO share price

HDB Financial Services IPO, should you invest? Let us find out detail.

HDB Financial Services (HDBFS), a subsidiary of HDFC Bank Limited, is one of India’s leading non-banking financial companies (NBFCs). Established in 2007, HDBFS caters to underserved segments through an expansive portfolio of consumer loans, enterprise finance, and fee-based services. The company’s operations span across 1,492 branches in 1,054 cities, reflecting its wide reach and focus on financial inclusion.

The NBFC sector plays a pivotal role in India’s economic growth, contributing significantly to credit expansion, particularly in unbanked regions. With India’s GDP projected to grow at 6.8% in FY25 and rural demand on the rise, the NBFC sector, including HDBFS, is poised for robust growth. As per industry reports, the financial services market in India is expected to grow at a CAGR of 10.3% over the next five years, driven by strong economic fundamentals and increasing penetration of financial products.

NBFC industry in India

The Indian non-banking financial companies (NBFC) industry is poised for significant growth by 2030, driven by increasing credit penetration and strong demand in the retail and MSME segments. Currently valued at ₹41 trillion in assets under management (AUM) as of FY24, the sector is projected to grow at a CAGR of 15-17% between FY24 and FY27.

Retail credit, including housing finance, personal loans, and vehicle financing, forms a substantial portion of this growth, expected to increase at 14-16% CAGR over the same period. By 2030, rising urbanization, improvements in financial literacy, and increasing middle-income households (projected to reach 181 million by FY30) will significantly enhance the demand for financial products.

NBFCs’ share in India’s systemic credit is expected to grow from 20% in FY24 to approximately 25% by FY30. Factors like digitization, innovative credit products, and enhanced risk management practices will further solidify their contribution to India’s financial ecosystem, making this an attractive space for investors and stakeholders.

HDB financial services – Products or Services Offering

HDB Financial Services (HDBFS) offers a comprehensive range of financial products and services catering to diverse customer needs. These include consumer loans such as personal loans, two-wheeler and auto loans, gold loans, and financing for consumer durables and digital products. For businesses, HDBFS provides unsecured business loans, loans against property, lease rentals, and securities, along with asset financing for commercial vehicles, construction equipment, and tractors.

The company also supports financial inclusion through micro-lending in underserved regions and distributes insurance products in partnership with leading insurers. Additionally, HDBFS leverages digital lending platforms for instant approvals and pre-approved offers, while its BPO services contribute to revenue generation by providing sales and collection support. This diverse portfolio underscores HDBFS’s position as a leading NBFC in India.

HDB Financial Services IPO, with a total size of ₹12,500 crore, comprises a fresh issue of ₹2,500 crore and an offer for sale of ₹10,000 crore by HDFC Bank. The primary objectives include:

Capital Infusion: Proceeds from the fresh issue will enhance the company’s capital base, ensuring adherence to regulatory requirements and supporting business expansion.
Unlocking Shareholder Value: The offer for sale enables HDFC Bank to monetize its investment in HDBFS, creating value for its shareholders.
Market Visibility: Listing on the stock exchanges will bolster HDBFS’s public profile and enhance transparency and governance.

HDBFS has exhibited consistent growth over the past three years, as evident from its financial metrics:

Revenue Growth: Total income grew from ₹11,879 crore in FY21 to ₹15,329 crore in FY23, registering a CAGR of 13.4%.
Profitability: Net profit for FY23 stood at ₹1,837 crore, marking a robust growth of 19.5% year-on-year. The company’s profit margins reflect efficient cost management and a focus on high-yielding products.
Asset Quality: With a Gross NPA ratio of 3.2% and a Net NPA ratio of 1.1% in FY23, HDBFS demonstrates sound asset quality, aided by stringent risk management practices.
ROE and ROCE: The company reported a Return on Equity (ROE) of 17.8% and a Return on Capital Employed (ROCE) of 14.5% in FY23, indicating efficient utilization of capital.

HDB Financial Services (HDBFS), a prominent non-banking financial company (NBFC) in India, has garnered significant attention in the unlisted securities market. As of January 2025, its unlisted shares are trading at approximately ₹1,225 per share, reflecting a market capitalization of around ₹96,946 crore.

This valuation corresponds to a price-to-book (P/B) ratio of 7.1, indicating robust investor confidence in HDBFS’s financial health and growth prospects. The company’s recent filing for an initial public offering (IPO) aiming to raise ₹12,500 crore has further amplified interest, with the IPO expected to offer shares at a price range between ₹750 and ₹800 per share.

HDB Financial Services IPO GMP

The discrepancy between the unlisted share price and the anticipated IPO price suggests a premium in the unlisted market, potentially driven by limited liquidity and heightened demand among investors seeking pre-IPO exposure. However, market experts advise caution, noting that the current unlisted valuations may be inflated compared to the expected IPO pricing. We will provide the HDB financial services ipo gmp when the HDB financial services ipo share price opens for public participation.

Bajaj Finance: A leader in the NBFC space, Bajaj Finance’s diversified portfolio and advanced digital capabilities make it a strong competitor. However, HDBFS’s focus on smaller towns and its strategic pricing provide differentiation.
Muthoot Finance and Shriram Finance: While these peers dominate niche segments like gold loans and commercial vehicle finance, HDBFS’s broader product offering ensures wider market coverage.
HDB Financial Services (HDBFS) stands out among its peers, such as Bajaj Finance, Shriram Finance, and Muthoot Finance, owing to its well-balanced approach to growth, strong financial metrics, and diversified portfolio.
While Bajaj Finance leads in total income with ₹36,429 crore in FY23, its business model heavily relies on consumer durable loans, creating concentration risk. In contrast, HDBFS’s revenue of ₹15,329 crore in FY23 reflects a diverse loan portfolio, spanning personal, business, and vehicle loans, which ensures risk mitigation and steady growth.
NPA ratio of 3.2% and a Net NPA of 1.1% in FY23, underscoring robust credit risk management. Although Bajaj Finance has a lower Gross NPA of 1.7%, its urban-centric focus limits its penetration in semi-urban and rural markets, where HDBFS has established a strong presence through 1,492 branches across 1,054 cities.
Muthoot Finance enjoys a niche in gold loans but remains concentrated in specific regions, while HDBFS’s geographic diversity balances urban and rural exposure, catering to India’s growing demand for financial inclusion.

Metric	HDB Financial Services	Bajaj Finance	Shriram Finance	Muthoot Finance
Total Income (FY23)	₹15,329 crore	₹36,429 crore	₹22,972 crore	₹12,540 crore
PAT (FY23)	₹1,837 crore	₹10,509 crore	₹5,647 crore	₹3,781 crore
GNPA Ratio (FY23)	3.20%	1.70%	6.30%	1.20%
Branch Network	1,492 branches	1,500+ branches	2,900 branches	5,000+ branches
ROE	17.80%	23.50%	16.40%	22.00%

Management Strength and Leadership

HDBFS boasts a seasoned leadership team with extensive experience in the financial services domain. The company’s alignment with HDFC Bank’s strategic vision ensures robust governance and adherence to high operational standards. This strong leadership underpins its ability to navigate challenges and capitalize on market opportunities.

Risks and Mitigation Strategies

Asset Quality Risks: Dependence on high-risk segments like personal loans poses challenges. However, HDBFS’s stringent credit evaluation processes mitigate this risk.
Regulatory Changes: Being an NBFC, the company is subject to evolving regulations. Maintaining compliance and adapting to regulatory shifts will be crucial.
Competition: Intense competition from banks and other NBFCs may pressure margins. HDBFS’s focus on customer-centric innovation helps counter this.

HDB Financial Services IPO Valuation and Justification

HDBFS IPO pricing is expected to align with its growth potential and market standing. With a price-to-earnings (P/E) ratio in the range of 22-25x, the valuation is competitive compared to industry peers. The company’s strong financial performance, sound asset quality, and growth trajectory justify this valuation. The HDB financial services share price listing will not only enhance liquidity for investors but also provide a benchmark for the NBFC sector. This may be a good opportunity to participate in the burgeoning NBFC Industry in India.

Should You Invest in HDB Financial Services IPO?

HDB Financial Services IPO presents a compelling investment opportunity for those seeking exposure to India’s rapidly growing financial services sector. The company’s robust financials, diverse product offerings, strong parentage, and strategic focus on technology and underserved markets make it a promising contender. HDB Financial Services IPO Share will be one of the best NBFC companies to be invested in the NBFC industry in India.

However, investors must consider risks related to asset quality and competition. Conducting due diligence on the final offer price and subscription trends will provide further clarity on the investment decision.