HDB Financial IPO cheaper than Bajaj Fin, Chola Invt; should you bet?

HDB Financial Services IPO consists of a fresh issue of 33.8 million shares worth ₹2,500 crore and an OFS component of 135.1 million shares worth ₹10,000 crore

HDB Financial Services is set to launch India's biggest-ever initial public offering (IPO) in the non-bank finance company space on Wednesday, June 25, 2025. The ₹12,500-crore IPO of the NBFC arm of HDFC Bank is also the largest IPO, so far, in calendar year 2025.

 

HDB Financial Services IPO consists of a fresh issue of 33.8 million shares worth ₹2,500 crore and an offer for sale (OFS) component of 135.1 million shares worth ₹10,000 crore. It will be available in the price band of ₹700 to ₹740 per share.

 

At the upper end of the price band, HDB Financial IPO is valued at a price-to-book (PB) multiple of 3.7 times and a price-to-earnings (PE) multiple of 27 times, Bloomberg data shows.

 

By comparison, Bajaj Finance trades at a PB multiple of 6.4x based on FY25 earnings and a PE multiple of 33.5x.

 

Cholamandalam Investment and Finance trades at a PB multiple of 5.5x and PE multiple of 30.6x.

 

Shriram Finance and L&T Finance, meanwhile, trade at lower PB multiples of 2.2x and 1.9x, respectively. Their PE multiples, too, stand lower at 12.8x and 18x, respectively. 

PE and PB ratios of leading NBFCs
	P/E Ratio	PB Ratio
Bajaj Finance	33.5	6.4
Cholamandalam Investment & Finance	30.6	5.5
L&T Finance	18	1.9
Shriram Finance	12.8	2.2
Note: PB Ratio is based on FY25 earnings

   

 

"At the IPO price of ₹740 per share, the issue is valued at less than 3x price-to-adjusted book value (P/ABV), based on FY26 earnings estimates. This is at a steep discount to larger peers such as Bajaj Finance and Chola, discounting relatively lower return ratios and growth," noted analysts at Centrum Institutional Research.

Should you subscribe?

Considering that the IPO is decently valued given its strong parentage, brand, governance, risk management and a high credit rating, analysts suggest investors subscribe to the issue for 'long-term'.

 

Analysts at SBI Securities recommend investors to ‘Subscribe’ to the issue at the cut-off price as the company is well placed to register healthy growth while witnessing an improvement in the asset quality.

 

Those at Centrum Institutional Research said HDB Financial delivered a strong operating performance over FY21-25, supported by a granular, branch-driven retail portfolio that enabled it to maintain net interest margin (NIM) of around 8 per cent on average.

 

This, it said, translated into robust earnings and asset under management (AUM) growth, with compounded annual growth rate (CAGR) of 41 per cent and 15 per cent, respectively.

 

"While the company faced elevated credit costs during this period, it managed to sustain an attractive return profile, posting return on asset (RoA) of over 2 per cent and return on equity (RoE) of 14 per cent, a trend expected to continue going forward," it added. The brokerage, too, has a 'Subscribe' rating.

HDB Financial IPO: Key risks

That said, analysts cautioned against making a quick buck in the IPO as several large IPOs dip post-listing. Investors, thus, should build positions gradually, they said.

 

"HDB Financial's profit growth has been muted over the last two to three years. The stock's listing will bring in greater accountability," said G Chokkalingam, founder and chief investment officer at Equinomics Research.

 

HDB Financial reported a 11.6-per cent year-on-year decline in net profit in FY25. Further, PAT growth slowed to 25.6 per cent in FY24 vs 93.7 per cent in FY23.

 

That apart, analysts cautioned against the company's Gross Stage-3 loans, which accounted for 2.3 per cent of the gross loans as of March 2025, along with a higher share of unsecured loans at 27 per cent.

Brace for near-term volatility

HDB shares are trading at ₹793 in the unlisted market, commanding a grey market premium of ₹53 or 7.16 per cent. Ambareesh Baliga, an independent market expert, warned that the stock may see selling pressure, post the expiry of the lock-in period, from early or those investors who are stuck at higher levels in the grey market.

 

"So, while listing gains are possible, investors should be prepared for volatility," he added.