HDB to debut on Mumbai bourse following biggest Indian IPO of 2025

By Ashutosh Joshi

 

Shares of HDB Financial Services Ltd. will start trading in Mumbai on Wednesday after the shadow lender’s ₹12,500 crore ($1.5 billion) initial public offering — India’s biggest this year — attracted strong demand from investors.

 

HDB, a unit of India’s biggest private lender HDFC Bank Ltd., sold shares at ₹740 apiece, the top of their marketed range. The offering lured interest from global funds such as those managed by Morgan Stanley and Allianz SE, as well as from domestic institutions like Life Insurance Corp. of India.

 

The IPO is the biggest since Hyundai Motor India Ltd.’s record $3.3 billion deal in October and comes as institutional share placements and listings are picking up after a lull that followed a blockbuster 2024. India’s $5.4 trillion stock market is booming again on the back of foreign inflows, with the benchmark index approaching a record high. 

 

 

A solid debut for HDB could augur well for some other closely watched deals expected later this year, including those of Tata Capital Ltd. and the domestic unit of South Korea’s LG Electronics Inc.

 

Shadow lenders like HDB typically target customers underserved or unserved by banks because of a limited credit history and low income, making them a crucial part of the financial landscape in the world’s most populous nation. Their business is seen benefiting in the current environment as the Indian central bank has taken aggressive efforts to stimulate the economy via interest-rate cuts and liquidity injections. 

 

“There will be investor interest because of HDB’s asset size and parentage. It’s a strong brand play,” said Rajnath Yadav, an analyst at Choice Equity Broking Pvt. Further, the Indian central bank’s recent policy measures are favorable for shadow lenders, he added.

 

HDB has a loan book of almost $12 billion and operates more than 1,700 branches with about 90,000 employees, according to its IPO document.

 

Rajiv Mehta, an analyst at Yes Securities India Ltd., says HDB’s “palatable IPO valuation” offers an attractive opportunity for returns. The stock is priced at about 3.4 times book value on a trailing 12-month basis, a discount to peer Cholamandalam Investment and Finance Co. that has a valuation of 5.7 times, according to Mehta. 

 

India’s top shadow lender Bajaj Finance Ltd. trades at 6 times its book while Sundaram Finance Ltd. is valued at more than 4 times, according to data compiled by Bloomberg.

 

A dozen banks have helped arrange the HDB deal, including BNP Paribas SA, JM Financial Ltd., and Bank of America Corp.