HDB Financial Services eyes IPO launch pending parental consent: Stay updated
HDB Financial Services, the non-banking financial arm of HDFC Bank, is on the cusp of a significant milestone as it prepares for an Initial Public Offering (IPO) with a potential valuation ranging between US$9 billion to US$12 billion. The IPO journey, which is contingent upon approval from its parent company, HDFC Bank, is anticipated to list by September 2025.
IPO News: The move to go public is part of a broader strategy to unlock value within HDFC Bank’s diverse portfolio of financial services. With a robust network of 1,492 branches nationwide as of March 31, 2023, HDB Financial Services stands as one of the largest finance companies in terms of market capitalization. The company’s core focus areas include vehicle loans, loans against property, and personal loans, with secured loans constituting around 75.8 percent of the total portfolio.
The urgency for HDB’s IPO is driven by regulatory compliance, as the company must list before September 2025 to adhere to Reserve Bank of India regulations. This compliance has been a catalyst for the company’s preparations, with CFO Srinivasan Vaidyanathan revealing that the IPO listing requirement is scheduled for September 2025
HDB Financial Services has shown a Compound Annual Growth Rate (CAGR) of 8.4 percent in the last five years, with its asset under management (AUM) standing at Rs 83,989 crore as of the end of December. The positive sentiment has already been reflected in HDB shares, which have surged over 30% in the past three months in the unlisted market, indicating promising prospects for its debut.
The company’s performance has witnessed a robust recovery, both in terms of asset growth and asset quality, after facing challenges during the pandemic. Its gross stage 3 assets/NPA have reduced to 2.25 percent, as of December 31, 2023, from 2.73 percent, as of March 31, 2023. The company’s restructured book has also substantially reduced to around 0.7 percent of the AUM, as of March 31, 2023, from 7.14 percent, as of March 31, 2022. HDB has maintained a stage 3 provision coverage ratio of 68 percent, as of December 2023-end.
As HDB Financial Services awaits the green light from HDFC Bank, the lender also plans to open nearly 200 branches in the current fiscal year as it aims to grow its loan book. This expansion is aligned with the company’s strategy to penetrate deeper into geographies with microfinance products, enhancing its presence and service offerings.
The impending IPO of HDB Financial Services is a testament to the company’s resilience and strategic growth. It not only marks a significant step for the company but also reflects the evolving landscape of India’s financial services sector. Investors and market watchers are keenly observing the developments, as the successful listing of HDB Financial Services could set a precedent for other non-banking financial companies (NBFCs) in the country. The HDB IPO, once launched, is expected to be a landmark event in the Indian stock market, offering a new avenue for investment and growth.
