RATING

RECOMMENDATION

Buy

  • ROFR Required
  • Available in Depository:

  • NSDL

  • CDSL

  • Available for Investment:

  • Primary

  • Secondary

RATING

RECOMMENDATION

Buy

Business Type

Traditional Business

RATING

RECOMMENDATION

Buy

Business Type

Traditional Business

Discover and get complete analysis on HDB Financial Services stock price & Information Like- Funding, Threats, Opportunities, Awards/Achievements, Strengths & HDB Financial Services Latest News.

ISIN

INE756I01012

Face Value

₹10.00

Total Share

79,04,40,031

Total Income

₹5,551.50 Cr

Profit After Tax

₹1,011.40 Cr

EPS

₹12.81

P/E

50.35

P/B

5.67

Market Capitalisation

₹50,983.38 Cr

Enterprise Value

₹1,01,873.86 Cr

Book Value

₹113.77

Intrinsic Value

₹402.44

Dividend Yield

0.16 %

Earnings Yield

1.99 %

Sector

Financials

Sub-sector

Consumer Finance

Category

Upcoming IPO

Cashflow - Operations

₹1,957.09 Cr

Cashflow - Financing

-₹1,499.54 Cr

AUM

₹61,444.00 Cr

HDB Financial Services Growth

Compounded Sales Growth

  • 36.96%

    1 Year

  • 9.33%

    5 Year

  • 33.54%

    9 Year

Pro Only

Compounded Profit Growth

  • 158.36%

    1 Year

  • 7.68%

    5 Year

  • 28.97%

    9 Year

Pro Only

Return On Equity

  • 11.25%

    2022

  • 16.59%

    2018

  • 16.73%

    2014

Pro Only

About HDB Financial Services

  • HDB Financial Services (HDBFS), a non-banking financial company, provides, collection, and insurance services in India. The company operates in two segments, Lending Business and BPO Services. It offers consumer loans, such as consumer durable, digital products, lifestyle products, auto, two-wheeler, gold, and personal loans to individuals; enterprise loans, including unsecured business, enterprise business, property, lease rental, and securities loans, as well as auto refinance services. The company also provides loans for the purchase of new and used commercial vehicles, construction equipment, and tractors, as well as refinancing services for existing vehicles.
  • In addition, it runs 18 collection call centers with a capacity of approximately 5,500 seats that offers collection services for the retail lending products of HDFC Bank; and provides sales support, back office, operations, and processing support services to HDFC Bank. Further, the company offers business process outsourcing services that deliver back office services, which include forms processing, documents verification, finance and accounting, and operations and processing support to HDFC Bank. Additionally, it provides life and general insurance products; and markets and promotes various financial products. 
  • It is a subsidiary company of HDFC Bank, HDFC owns 95.11% of shares in HDBFS.
  • HDBFS is accredited with CARE-AAA & CRISIL-AAA ratings for its long-term debt & bank facilities and an A1+ rating for its short-term debt & commercial papers, making it a strong and reliable financial institution.
  • The company was incorporated in 2007 and is located in Ahmedabad. It has 1500 branches spread across 24 States & 3 Union Territories.

  • HDB Financial Services IPO Details

The non-banking financial company (NBFC) earlier had plans to raise funds via an initial public offering under the leadership of Aditya Puri. On 6 August 2021, it was reported that HDFC bank has decided to suspend IPO plans for its subsidiary HDB Financial Services Ltd. (HDBFSL). 

The NBFC arm will focus on further improving its technology platform. The bank will first consider testing the market for price discovery through a small stake sale.

  • HDB Financial Services Funding

Funded By Funding Amount Date of Investment Funding Round Fund Name
International Finance Corporation ₹ 975 Cr May 2018 1 Debt Financing
  • HDB Financial Services Merger & Acquisition

Acquisition

HDB Financial Services Limited agreed in principle to acquire Atlas Documentary Facilitators Company Private Limited from HDFC Bank Ltd and others for INR 75.6 million on July 15, 2014. As per the terms of agreement, HDB Financial Services issued 7,540,515 equity shares of INR 10 each to Atlas Documentary Facilitators Company equity shareholders and it also issued 20,470 equity shares of INR 10 each to HBL equity shareholders.

  • HDB Financial Services Revenue Segmentation

  • Lending Services
  • BPO
  • HDB Financial Services Product & Services

  • Lending Services
        Consumer Loans
        Enterprise Loans
        Asset Finance
        Micro-Lending
  • BPO Services
  • Fee-based products / Insurance Services
  • HDB Financial Services Assets

As of 31st Mar'22, HDB Financial services has assets worth Rs.78.15 Cr.

AssetsAmount
Office equipment
Rs.11.27 Cr.
Furniture and fixtures
Rs.14.64Cr.
Leasehold improvements
Rs.28.76 Cr.
Computers
Rs.20.05 Cr
building
Rs.0.12 Cr.
motor cars
Rs.3.29 Cr.
software and System development
Rs.12.01 Cr.


  • HDB Financial Services Industry Overview

Industry Statistics

  • Financial services in India consists of commercial banks, insurance companies, non-banking financial corporations(NBFC), housing finance  cooperation(HFC), pension funds, mutual funds and other smaller financial institutions.
  • As a critical part of India’s financial system, NBFCs have been driving credit inclusion among individuals and enterprises by improving access and bridging pricing inefficiency through innovative product solutions and delivery models.
  • As per CRISIL report, non-bank lenders(NBFCs and HFCs) constitute about 25.0% (over Rs. 36 Lakh Cr.) of the systemic credit outstanding and have financed over 10 Cr. customers drawing strength from their extensive footprint largely in rural and semi-urban areas.
  • During pandemic NBFCs were adversely impacted due to their underlying business models. In the second half of fiscal 2021, global financial markets remained largely buoyant, fueled by optimism around a speedy vaccine-led recovery. 
  • As per RBI’s data Year-on-Year(Y-o-Y) growth of personal loans in the banking industry was 10% at Rs.2813713 Cr. as of 26th Mar'21 compared to 15% at Rs.2553649 Cr. as of 27th Mar'20. The consumer durable loans segment which had grown Y-o-Y by 48% to Rs.9299 crore as of 27th Mar'20 took the worst hit with a contraction of -21% and was at Rs.7307 Cr as of 26th Mar'21.
  • As of Sep'20, NBFC-Fintechs personal and consumer loans were growing strong with more than 85% share in active loans.
  • With respect to product wise distribution in new sanction of loans, consumer durable had a downward trend from FY18-FY21, with share decreasing from 40% to 38%. One of the reason for the same is consumer goods do not wear out quickly, and therefore do not have to be purchased frequently. The GNPA of NBFCs, saw an increase from 6.1% in 2019 to 6.8% in 2020 and marginally reducing to around 6.4% in FY21, whereas NPA remained constant at 3% in 2019 & 2020 and marginally reduced to 2.7% in FY21.
  • The domestic commercial vehicle industry closed FY21 with a 21% de-growth after recording a 29% negative growth in FY20 which is predominantly on account of the disruption in sales due to lockdown restrictions, negative customer sentiments and economic slowdown. 
  • Newly formed NBFCs are using advanced technology which may result in a better future for NBFCs. Technologies like Artificial Intelligence, Machine learning have prepared lenders in evaluating the customer’s perception and also in maintaining alternative credit scoring models. In FY21 loan growth in the financial industry was weaker due to Covid-19 and the lockdown the followed resulting in enhanced competition in the vehicle industry.
  • Major demand drivers for the industry are customer experience and digital services provided by company, which derives the growth of individual company.



Future Prospects

  • Between fiscal 2021 and fiscal 2024, Indian retail credit market is expected to make a strong comeback and grow at 13-15%.
  • The report by IFC titled “Financing India’s MSMEs” published in November 2018 shows about 47.6 million MSME, which are unregistered and hence unlikely to have received any formal source of debt. Further, out of the total debt supply of INR 69.3 trillion to this sector, only INR 10.9 trillion is met by formal sources. This presents a huge opportunity to financial institutions that have developed an underwriting and collections model to cater to the business needs of this borrower segment. 
  • Now NBFCs are using advanced technology which may result in a better future for NBFCs. Technologies like Artificial Intelligence has prepared lenders in evaluating the customer’s perception and also in maintaining alternative credit scoring models. So future of NBFC is with technology.

Government Initiatives

  • A key measure taken by the Reserve Bank and Government of India to ameliorate the liquidity constraints faced by NBFCs, was to set up a Special Purpose Vehicle (SPV) to purchase short-term papers from eligible NBFCs/HFCs, which could then utilise the proceeds to extinguish their existing liabilities. The special securities issued by the SPV were guaranteed by the Government of India and would be purchased by the Reserve Bank. 
  • Additionally, the scope of the Government scheme on partial credit guarantee (PCG) was expanded to cover the borrowings of lower-rated NBFCs, HFCs and MFIs.
  • Liquidity boost for NBFCs : The government announced a ₹ 450 billion partial guarantee scheme (for NBFCs) and ₹ 300 billion special liquidity scheme for NBFCs, housing finance companies (HFCs) and MFIs, aimed at covering the concern of credit risk perception on mid and small size non-banks.
  • Loan interest subvention scheme (₹ 15 billon): Under this scheme, the government has provided 2% interest subvention for loans given under Mudra-Shishu scheme. These loans are up to the ticket size of ₹ 50,000 and are mostly given by NBFC-MFIs benefiting low income groups customers.
  • Credit Guarantee Fund Scheme extended to cover NBFCs: One of the major reasons why MSMEs are credit-starved is the insistence by banks or financial institutions for the provision of collateral against loans. In order to address this issue, the government launched it to make collateral-free credit available to micro and small enterprises. 

HDB Financial Services Strengths

  • HDB Financial services has a strong brand name and vast distribution network, especially in rural areas and small towns.
  • The company has automated the loan application process to make informed credit decisions at the initial stage itself through various tools like CRM, Rule Engine, Bureau Integration, Deviations Management etc. This has resulted in higher productivity, lower overhead costs and swift processes, thus, enabling a seamless journey for the customer and leading to financial inclusion. 
  • Tier 1 and Tier 2 of the company is well above RBI standard i.e., 15.2 and 5.0 respectively.
  • HDB financial services has loan disbursements 29,033 crore during FY22 as against 24,990 crore in the previous year.

HDB Financial Services Shortcomings

  • Huge portion of loan portfolio of the company consist of unsecured loans, in FY21 company had done unsecured lending of worth 14,682.03 Cr.
  • Company's business is so diversified. They deals in various kinds of loan products including many types of consumer loans and enterprise loans.

HDB Financial Services Opportunities

  • There is large untapped rural and urban market which can’t get financial services from traditional banks so HDBFS can increase its penetration in those markets.
  • Company can use digital solutions for business/collections this may improve efficiency and reduce cost of operations.
  • According to the National Financial Literacy and Inclusion Survey (NCFE-FLIS) 2019, only 27% of Indian population is financially literate indicating huge gap and potential for financial services industry, company can work towards bridging that gap.
  • The company can continue to invest in technology and data analytics to build a scalable and efficient operating model / to improve customer experience, increase productivity and decrease costs.
  • In May 2020, RBI cut interest rates to its lowest in 20 years to 4% which has compelled banks to cut rates for FDs. Hence, RBI giving money to boost Banks and banks would lend to NBFC at much less rate this may result in higher NIMs for NBFCs.
  • Greater emphasis on asset quality, digitalization across the customer lifecycle, co-lending partnerships, effective use of structured financing, and capital base strengthening, may help NBFCs move towards safer economic environment, which is expected in the latter half of fiscal 2022 and beyond.
  • After a slowdown in FY 2021-22 due to the pandemic and buyer reluctance due to increased vehicle prices due to the implementation of BS-VI norms, NBFCs can expect growth in the vehicle-financing space in FY 2021-22.

HDB Financial Services Threats

  • Applicability of liquidity coverage ratio (LCR) was imposed on NBFCs by RBI. Such frequent changes in regulatory framework poses challenges on day-to-day operations of the NBFCs.
  • The outbreak of COVID-19 has further disrupted the existing stress in the Indian financial system due to significant drop in customer acquisition, sharp fall in customer repayments/collections and liquidity stress emanating from increased risk aversion by banks.
  • Since FY19, non-bank lenders have been increasingly challenged for growth on account of liquidity crisis in the sector. The key factors which have exposed them to growth challenges include difficulty in rolling over existing debt and raising new debt due to liquidity squeeze.
  • The company is affected by volatility in interest rates for both lending and treasury operations, which could cause net interest income (“NII”) and net interest margin (“NIM”) to vary and consequently affect company's profitability, result of operations and cash flows.
  • Financial service firms are prime target of cybercrimes. Because of sensitive data entry they carry, they are more likely to be targets which can be a big threat for them
HDB Financial Services Rating

  • RECOMMENDATION

    Buy

  • HDB Financial Services Detail Info

Industry Statistics

PRIVATE LIMITED

Registered In

India

last Updated

26/01/2022

Registered Date

04/06/2007

Planify Ticker

HDB

Reg Office: HDB Financials Services Limited, Ground Floor, Zenith House, Keshavrao Khadye Marg, Mahalaxmi, Mumbai- 400034

Website Visit

Frequently Ask Questions

Currently the company is not planning for an IPO. The non-banking financial company (NBFC) earlier had plans to raise funds via an initial public offering under the leadership of Aditya Puri. On 6 August 2021, it was reported that HDFC bank

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This new SEBI rule was introduced in the month of August-2021, wherein the SEBI has reduced the lock-in period previously from 1 year to 6 months to encourage more and more funds to be invested in startups which are going to public or IPO in near future. Reduction of lock-in is seen as big step and after that many PMS funds are advising their clients to invest in Pre-IPO shares to get the benefit of early stage investment.

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If you see the thesis of investment in the unlisted shares then it is being done mainly to take the advantage of IPO market. And, if the IPO plans of company get delayed due to market conditions or any other reason then demand suddenly drops in the market. The unlisted market works mainly on demand and supply and if there is no IPO news then getting exit would be difficult.

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We at Planify do the valuation based on 2 methods.
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As an investor in the unlisted space, we would always recommend that you must check all the risk parameter carefully before investing in the unlisted space.

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