HDB Financial Services Share Price Update from HDFC Bank
HDB Financial Services made a notable entry into the stock market on July 2, with its shares debuting at Rs 835 on both the BSE and NSE, reflecting a 12.8% premium over the IPO issue price. The IPO, supported by HDFC Bank, garnered an impressive Rs 1.61 lakh crore in bids, indicating strong interest from institutional investors compared to retail participants. The Qualified Institutional Buyer (QIB) segment saw a staggering 55-times oversubscription, while retail subscriptions reached 1.4 times, leading to an overall subscription rate of nearly 17 times.
Market Performance and Valuation
On its first trading day, HDB Financial Services reached a peak share price of Rs 845.75, resulting in a market capitalization of Rs 70,198 crore. This achievement positions HDB as the eighth largest non-banking financial company (NBFC) in India by market value. In comparison, Bajaj Finance leads the sector with a market cap exceeding Rs 5.77 lakh crore, followed by Jio Financial Services at Rs 2.07 lakh crore and Cholamandalam Investment and Finance at Rs 1.31 lakh crore. Other significant players in the NBFC sector include Shriram Finance, Muthoot Finance, SBI Cards, and Aditya Birla Capital, each with substantial market capitalizations.
HDB Financial’s IPO stands out as the second most oversubscribed offering among issues exceeding Rs 10,000 crore, trailing only the Tata Technologies listing. While it did not surpass the Rs 3 lakh crore subscription milestone achieved by Bajaj Housing Finance, analysts have noted the strong demand for HDB’s shares. Prashanth Tapse from Mehta Equities has advised clients to maintain a long-term position in HDB Financial shares, highlighting the company’s favorable position to benefit from India’s expanding credit market, particularly in retail and small and medium-sized enterprises (SME) lending.
Analyst Recommendations and Growth Prospects
Emkay Global has initiated coverage of HDB Financial Services, issuing a ‘Buy’ rating with a target price of Rs 900 for June 2026. This recommendation is based on an estimated three times the FY27 book value. Analysts emphasize several key advantages that support HDB’s growth potential. The company boasts a broad-based business model, serving over 19 million customers with a well-diversified lending portfolio across various geographies and products. Notably, the concentration risk remains low, with the top 20 exposures constituting only 0.34% of total assets under management (AUM).
HDB Financial’s strategic focus on untapped markets is further enhanced by its management continuity, with a significant portion of its leadership team having over ten years of tenure. Direct sourcing accounts for 82% of FY25 disbursements, and 70% of branches are located in tier-4 and smaller towns. This approach positions the company well to capitalize on growth opportunities in less saturated markets.
Future Financial Outlook
Looking ahead, HDB Financial anticipates favorable economic conditions that could lead to early rate reductions and lower credit expenses, ultimately boosting margins and earnings. Emkay forecasts that HDB Financial will achieve a return on assets (RoA) of 2.7% and a return on equity (RoE) of 17% by FY28. Additionally, the company is projected to experience a compound annual growth rate (CAGR) of 20% in AUM and 27% in earnings per share (EPS) during the FY25-28 period. These projections underscore the company’s robust growth trajectory and its ability to navigate the evolving financial landscape in India.
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