HDB Financial Services Shares Debut on NSE with 13% Premium

On Wednesday, HDB Financial Services shares made their debut on NSE by opening at a price of Rs. 835 per share, which is around 13 percent higher compared to its issue price of Rs. 740. Being a subsidiary of HDFC Bank, there was strong investor interest, particularly from institutional and high-net-worth individuals, despite relatively cautious retail participation.

HDFC Bank currently holds around 94.36 percent stake in the company. This IPO, sized at Rs. 12,500 crore, comprised a fresh issue of Rs. 2,500 crore to bolster the company's Tier-I capital base and an offer for sale (OFS) of Rs. 10,000 crore by HDFC Bank. This listing fulfills the Reserve Bank of India's list mandate requiring material subsidiaries of banks, like upper-level NBFCs, to be listed within a stipulated timeframe.

In terms of financial performance for the fiscal year 2025, HDB Financial Services demonstrated robust loan growth and revenue expansion but faced profitability pressures due to rising asset quality concerns. The company’s gross loan book grew by 18.46 percent year-on-year to Rs. 1,06,880 crore as of March 31, 2025, up from Rs. 90,220 crore the previous year. Correspondingly, total revenue from operations increased by 18.32 percent to Rs. 74,456 crore, while net profit declined by approximately 12 percent to Rs. 2,176 crore due to higher provisioning costs associated with increased non-performing assets (NPAs).

Asset quality remains a key challenge for HDB Financial. The net NPA ratio rose to 0.99 percent in FY25 from 0.63 percent in FY24, which is notably higher than peers like Bajaj Finance (0.56 percent) and Sundaram Finance (0.75 percent). They have a return on equity (RoE) of 14.7 percent, which trails behind Bajaj Finance's 19.35 percent and other diversified consumer financiers.

They outlined a focused growth strategy centred on expanding its diversified loan portfolio across enterprise lending, asset finance, and consumer finance. The company plans to leverage its strong parentage under HDFC Bank to deepen market penetration, especially in underserved segments and semi-urban and rural areas. It aims to improve operational efficiencies through technology adoption and data analytics to improve credit appraisal and risk management. Additionally, HDB intends to strengthen its Tier-I capital base via the IPO proceeds to support sustainable loan growth while maintaining healthy asset quality and improving return ratios over the medium term.

The listing of HDB Financial Services on NSE marks a significant milestone for the HDFC Bank group, reflecting strong market confidence despite some asset quality challenges. The company’s FY25 financials show healthy growth but highlight the need for improved profitability metrics relative to peers like Bajaj Finance. Management’s forward-looking plans focus on robust growth in lending, cost optimisation, and credit risk management can improve shareholder value over the coming years.