HDB Financial IPO: Price band set at Rs 700-740 per share, 66% discount to grey market valuation

Investors in HDB Financial Services Ltd are in shock after the non-banking financial company (NBFC) announced a price band of Rs 700–740 per share for its initial public offering (IPO), marking a steep 66 percent discount from its prevailing unlisted market price. With this, at the upper end of this price band, the company’s market capitalization would be around Rs 68,900 crore. Currently, HDB Financial's shares are trading at around Rs 1,250 in the unlisted market, reflecting a decline of 15 percent from their peak of Rs 1,455 recorded in September 2024. Despite the recent correction, the stock had delivered a robust gain of over 115 percent between January and September 2024 in the unlisted space. Interestingly, HDB Financial is not alone in pricing its IPO significantly below grey market expectations. Companies like Tata Technologies, AGS Transact, UTI Asset Management Co Ltd, and PB Fintech have also previously priced their IPOs below their unlisted market valuations. Market experts caution investors against entering the unlisted segment purely based on IPO enthusiasm without thorough due diligence. The unlisted market is inherently volatile and carries higher risk, requiring a long-term and patient investment approach for meaningful wealth creation. Analysts, speaking anonymously, suggest that similar pricing strategies may be seen in upcoming IPOs of Tata Capital and the National Stock Exchange (NSE), where offer prices are also expected to fall short of current unlisted valuations. According to them, the unlisted space is best suited for early-stage investments—typically two to three years before the IPO—at reasonable valuations. If the investment carries no discount relative to the expected IPO pricing, its value proposition is significantly diminished.​