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HDB Financial Services, a subsidiary of HDFC Bank, initiated its journey into the stock market on Wednesday, July 02, marking a significant moment for the non-banking financial company (NBFC). The anticipation surrounding the IPO was palpable, evidenced by the robust grey market premium (GMP), which hinted at a potential listing pop of approximately 10 percent over the initial issue price. The GMP, a crucial indicator of investor sentiment in the unofficial market, hovered around Rs 72-75 per share, suggesting a positive market reception for HDB Financial Services. The initial public offering, which was open for subscription from June 25 to June 27, was strategically priced between Rs 700 and Rs 740 per share. Investors were offered the opportunity to purchase shares in lots of 20, making the IPO accessible to a wide range of market participants. The IPO successfully raised a substantial Rs 12,500 crore, comprising a fresh issue of shares worth Rs 2,500 crore and an offer-for-sale (OFS) component of Rs 10,000 crore, spearheaded by HDFC Bank Ltd. The OFS allowed HDFC Bank to partially divest its stake in HDB Financial Services, providing an opportunity for new investors to participate in the company's growth story. Brokerage firms exhibited a favorable outlook on the IPO, recommending it as a viable long-term investment option. The offering garnered an impressive response from investors, with approximately 46.7 lakh applications received, culminating in bids worth a staggering Rs 1.32 lakh crore. The overall subscription rate stood at an impressive 16.69 times across various investor categories, underscoring the strong investor confidence in HDB Financial Services' prospects. The overwhelming subscription rate across different segments highlights the broad-based investor interest in the company's future growth trajectory.
Mahesh Ojha, AVP-Research at Hensex Securities, provided valuable insights for investors, suggesting that those who secured allotment should hold the stock for the long term. He further advised investors who missed out on the allotment to consider entering the market around the IPO price, particularly during periods of market volatility. Ojha emphasized that HDB Financial Services is a portfolio stock that has the potential to deliver long-term value to investors. Harshal Dasani, Business Head at INVasset PMS, offered a cautious perspective for retail investors, recommending that they wait for price stabilization and closely monitor the stock's performance over the initial 3-6 months post-listing. Dasani advised retail investors to consider entering the market only after the stock stabilizes or demonstrates consistent growth, capitalizing on the expanding credit market in India over the next five years. This cautious approach aims to mitigate potential risks associated with initial market volatility and allows investors to make informed decisions based on the company's performance. The qualified institutional buyers (QIBs) category witnessed an exceptional subscription rate of 55.47 times, with bids amounting to a significant Rs 1,31,696.50 crore. Non-institutional investors (NIIs) also displayed strong interest, subscribing 9.99 times, indicating a healthy appetite for the IPO among high-net-worth individuals and corporate investors. The retail portion of the IPO was subscribed 1.41 times, while the employees' category saw a subscription rate of 5.72 times. The shareholders' section was oversubscribed 4.26 times, further demonstrating the broad-based investor interest in HDB Financial Services.
Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, highlighted HDB Financial Services' strategic positioning to capitalize on India's burgeoning credit boom, projecting lending growth of 13-15 percent annually, reaching Rs 297 lakh crore by FY28. Jain emphasized that HDB Financial Services' strong digital onboarding capabilities and focus on under-banked markets provide the company with a long-term competitive edge. She recommended that investors with a multi-year investment horizon consider holding the stock for steady growth, aligning with the company's long-term potential. Prashanth Tapse, Senior VP (Research) at Mehta Equities, echoed this sentiment, stating that the strong subscription momentum and prevailing bullish sentiment in the market support a long-term holding strategy for HDB Financial Services. Tapse emphasized that the company is strategically positioned to benefit from India's structural credit growth, particularly within the retail and SME financing segments. He further suggested that investors who did not receive any allotment should consider accumulating shares during post-listing corrections, particularly during short-term volatility triggered by broader market movements. Tapse believes that HDB Financial Services offers a value-driven opportunity with both defensive and growth characteristics, making it suitable for investors with a 3-5 year investment horizon. Established in 2007 and headquartered in Ahmedabad, HDB Financial Services focuses on providing retail financial solutions. The company operates through three key business verticals: enterprise lending, asset finance, and consumer finance. It also provides business process outsourcing (BPO) services to its parent company, HDFC Bank.
The IPO was managed by a consortium of leading financial institutions, including JM Financial, Bofa Securities India, BNP Paribas, Goldman Sachs (India), HSBC Securities & Capital Markets, IIFL Capital, Jefferies India, Morgan Stanley India, Motilal Oswal Investment, Nomura Financial Advisory, Nuvama Wealth, and UBS Securities India. This collaboration of renowned financial experts underscores the significance and complexities involved in taking a company public, ensuring that all facets of the process are meticulously handled. The expertise of these entities in handling the regulatory landscape, marketing, and financial intricacies of the IPO process are invaluable. MUFG Intime India (Link Intime) served as the registrar for the IPO, managing the crucial tasks of processing applications, allocating shares, and handling investor queries. A registrar is a key player in the IPO process as it manages the massive amount of data and ensures the accuracy and timeliness of the allotment process. The HDB Financial Services IPO attracted significant interest, demonstrating confidence in the company's future prospects. The strong subscription rates across all investor categories, coupled with positive recommendations from brokerage firms, highlight the potential for long-term growth. The company's strategic focus on retail financial solutions and its established presence in the Indian market position it well to capitalize on the increasing demand for credit. With a robust financial foundation and a clear strategic direction, HDB Financial Services appears poised to embark on a successful journey in the public market. The company's long-term prospects and contributions to the Indian financial landscape will be closely monitored in the years to come.
The HDB Financial Services IPO highlights the vibrant nature of the Indian financial market and the continued appetite for quality companies seeking to raise capital. As the company embarks on its journey as a publicly listed entity, it will face both challenges and opportunities. The dynamic economic environment, coupled with evolving regulatory landscape, will require HDB Financial Services to maintain its focus on strategic innovation and operational efficiency. However, the company's established presence, strong financial performance, and the backing of HDFC Bank, provide it with a solid foundation for success. The participation of renowned financial institutions and the high level of investor interest demonstrate the significance of the IPO. Investors are keenly observing the HDB Financial Services IPO, hoping for long-term returns and recognizing the company's potential to significantly contribute to India's financial growth. This offering symbolizes the continued growth and evolution of the Indian financial market, showcasing the prospects for both domestic and international investment. The success of the HDB Financial Services IPO reflects the robust investor confidence in the Indian economy and its potential for future expansion. The IPO is expected to generate significant interest among investors and stakeholders, paving the way for further development and innovation within the financial landscape. As the company progresses, its growth strategy and market performance will be closely monitored, further strengthening the financial standing of the Indian market.
Source: HDB Financial Services IPO: Latest GMP before listing; post listing strategy & more