HDFC Bank Sets Sights on $9-10 Billion HDB Financial Services IPO in 2024

​HDFC Bank, one among India's biggest private region banks, is getting ready for a milestone with the initial public offering (IPO) of its non-banking financial arm, HDB Financial Services. The HDB Financial Services IPO is predicted to raise between $9 to $10 billion (₹78,000–87,000 crore), making it one of the largest IPOs within the Indian economic sector. Scheduled for late 2024, this IPO will considerably impact HDFC Bank's capital base and the broader NBFC panorama.​

​Company Background and Valuation

HDB Financial Services is the financial institution in the non-banking financial company (NBFC) sector. With a net worth of around ~₹13,300 crore from the June quarter FY24. The expected valuation translates to an estimated 4.5X-5x price to book value.

Current Market Performance of HDB Financial Services

As of now, HDB Financial Services holds a sizable presence in India’s NBFC space, providing a range of financial products along with loans for personal, commercial business, and asset financing. Its unlisted shares have attracted enormous interest from investors. The HDB financial services share price within the unlisted market is presently ₹1,260 per share, with a face value of ₹10 per share. Investors are keen at the HDB unlisted share price, spotting the surge in growth main up to the IPO.

The HDB financial IPO price is expected to be an essential part to determine the success of the IPO. HDFC Bank's strategic move to list HDB Financial Services aligns with the Reserve Bank of India's (RBI) policies, which mandate that all "Upper Layer" NBFCs have to be listed on mainboard within three years of being notified. This listing is not just a regulatory requirement but additionally a strategic step to liberate value for shareholders.

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HDB Financial Services: Financial Performance

HDB Financial Services has steady growth in its Assets Under Management (AUM), reflecting its capability to expand its loan portfolio and diversify its assets. AUM is an important indicator of an NBFC's scale, representing the overall marketplace value of assets managed on behalf of customers. The upward push in AUM underscores HDBFS's growing consumer base and strong market presence.

HDB executed a 28.75% growth in AUM, signifying the excessive level of trust customers have in their services and products. Additionally, HDB Financial Services holds top-tier credit score ratings, with CARE AAA and CRISIL AAA for long-term debt and centers, and an A1 score for short-term debt and Commercial Papers.

Financials (in ₹ Cr.)	FY22	FY23	FY24
Revenue	5,522	7,573	8,318
Profit after Tax (PAT)	1,011	1,959	2,460
EBITDA	1,446	2,739	3,449
AUM	61,444	70,084	83,989
EPS( ₹)	12	24	31

International and Domestic Bankers Involved

HDFC Bank has shortlisted several leading financial institutions to manage the HDB Financial Services IPO. Prominent international banks such as Morgan Stanley, Bank of America, Nomura, and UBS Securities have been chosen to lead the IPO process. On the domestic front, ICICI Securities, Axis Capital, and IIFL will be involved in the offering. Once the final bankers are appointed, the company is expected to file the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) within a month.

Pre-IPO Preparations

This will help the bank meet its capital requirements and pursue in addition increase opportunities, specifically after its current merger with HDFC Ltd. Moreover, the IPO comes at a time when non-banking financial companies in India are experiencing a big boom, pushed with the aid of rising demand for credit scores from underserved segments like small companies and individuals. The IPO will offer HDB Financial Services with the capital required to increase its lending operations and diversify its product services.

Conclusion

The upcoming IPO of HDB Financial Services could be a landmark event in the financial market. With its strong financials, market position, and strong support from HDFC Bank, the company is well-prepared for the IPO. Investors are keenly expecting the pricing and allotment details, mainly for high-demand classes like institutional investors.

For those considering investing in HDB Financial Services, the IPO represents an opportunity to tap into a growing NBFC that has already shown significant potential in the Indian financial market. As the company heads towards a possible ₹9-10 billion listing, market participants will be eager to see how the HDB financial IPO price compares to the unlisted price and what growth opportunities lie ahead post-listing.