HDB starts taking orders for one of India's biggest IPOs this year

By Ashutosh Joshi

 

HDB Financial Services Ltd. began taking orders for one of India’s biggest initial public offerings this year, in a deal that may fetch ₹125 billion ($1.5 billion) as the shadow lender seeks to benefit from the recent rally in stock prices.

 

The shares are being marketed from Wednesday at ₹700 to ₹740 each, valuing the company at as much as $7 billion. The company plans to take orders until Friday.  

 

The country’s biggest IPO since October comes amid a rebound in the benchmark Nifty 50 Index and will provide insights to the state of investor demand for large Indian issuances ahead of some potentially bigger deals coming up this year. 

 

 

The number of deals in 2025 has failed to keep up last year’s pace, when it was one of the world’s busiest places for new listings, including Hyundai Motor India Ltd.’s record $3.3 billion offering. HDB Financial will also be India’s first billion-dollar IPO since February. 

 

The firm, set up in 2007 as a subsidiary of top Indian private lender HDFC Bank Ltd., ranks seventh among diversified retail-focused shadow lenders in India, and held loans amounting to about ₹902 billion as of March, according to the company.

 

“Backed by the strong parentage of HDFC Bank, the company offers a well-diversified product portfolio with sound lending quality,” according to Anand Rathi Share & Stock Brokers Ltd. analyst Shivam Gupta. At the top of the range, the stock is valued at 3.7 times its price-to-book ratio and “fairly valued,” Gupta said.  

 

While loan growth in India has come off in recent months, the central bank’s latest measures are aimed at boosting people and companies to borrow more money.

 

The company’s focus on rural parts of India, where banking services aren’t as available in the most urban areas, “positions it well to capture future market opportunities” Arihant Capital Markets Ltd. analyst Abhishek Jain wrote in a note. Jain advised clients to subscribe to the IPO for over a longer term.

 

Breaking down the offering, HDFC Bank plans to sell ₹100 billion of stock, while HDB Financial plans to sell ₹25 billion of shares.

 

A dozen banks are arranging the deal, including BNP Paribas SA, JM Financial Ltd., and Bank of America Corp.