HDB Financial IPO in the works as HDFC sets stage to list NBFC arm

A non-deposit-taking lender, HDB Financial could fetch a valuation in the range of $9 billion to $12 billion ( ₹75,000 crore to ₹1 lakh crore) during the IPO, contingent upon prevailing market conditions, an investment banker source told the paper.

HDFC Bank holds 94.7 percent of its arm and is contemplating divesting a 10 percent stake in the IPO, potentially resulting in an issue size ranging from ₹7,500-10,000 crore, as per the report. Additionally, HDFC Bank is considering a pre-IPO share placement with investors.

HDFC Bank has reached out to prominent investment banks to solicit bids and valuation assessments for the proposed IPO, it added.

HDFC Bank aims to kickstart the share sale for its non-banking financial services arm either in the last quarter of 2024 or the first quarter of 2025, it added. If the IPO proceeds in 2024, it could mark one of the significant listings this year and the first from the merged HDFC Bank and HDFC entity.

HDFC Bank did not respond to queries, it added.

Regulatory Compliance and Financial Overview

HDB’s IPO assumes significance as the company must list before September 2025 to adhere to Reserve Bank of India regulations. As of March 31, 2023, the firm operates 1,492 branches nationwide and stands as one of the largest listed finance companies in terms of market capitalisation.

On January 17, HDFC Bank’s CFO Srinivasan Vaidyanathan noted that the bank has time till September 2025 to list HDB Financial Services. He then said said preparatory work on the IPO would begin shortly.

Its total revenue from operations amounted to ₹12,403 crore, with a profit after tax of ₹1,959 crore for the same period. HDB primarily focuses on vehicle loans, loans against property, and personal loans.

Brokers anticipate a robust listing for HDB Financial, attributing it to the company’s track record of profitability and robust parentage. The enthusiasm surrounding the IPO has already been reflected in HDB shares, which surged over 30 percent in the past three months in the unlisted market, bolstering expectations for a successful debut.

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Published: 13 Mar 2024, 09:30 AM IST