HDB Financial shares surge in unlisted market as HDFC Bank unit plans IPO launch

HDB Financial Shares Surge Ahead of IPO Launch by HDFC Bank Unit.

Expert Analysis:

• IPO Plans and Compliance: HDB Financial Services is raising Rs 12,500 crore through an IPO to comply with RBI’s 2022 listing mandate for upper-layer NBFCs.

• Purpose of IPO Proceeds: Funds raised will strengthen the company’s Tier-I capital base to support future growth.

• Unlisted Share Market Activity: Shares peaked at Rs 1,450 in October but now trade at Rs 1,295, reflecting sustained investor interest.

• Valuation Target: HDFC Bank targets a valuation of Rs 78,000-87,000 crore for HDB Finance, with a price-to-book ratio of 4.5-5 times.

• Strong FY24 Financial Performance: Loan book grew 17 percent year-on-year to reach Rs 66,000 crore, driven by strong demand for personal, vehicle, and small business loans. 

• Financial Growth: Total revenue increased from Rs 12,402 in the previous year to Rs 14,171 crore In the FY 2023-24, While profit increased from Rs 1,959 crore in FY23 to Rs 2,460 crore in FY24.