The IPO comprised a fresh issue of ₹2,500 crore with an offer for sale of ₹10,000 crore by HDFC Bank. HDB Financial Services is the most subscribed billion-dollar IPO since the Zomato issue four years ago, and the largest non-banking financial company (NBFC) IPO so far.
Analysts said investors can choose to hold the stock from a long-term view of 2-3 years while fresh investors can wait for dips to buy.
“The listing was better than expected primarily due to better market sentiment led by investors relying on HDFC Bank’s strong parentage,” said Manish Chowdhury, head of research, StoxBox. “The listing gains were capped due to sluggish FY25 performance, especially on margin and asset quality fronts.”
Investors can choose to hold for a period of one year and fresh investors can wait on sidelines for the quarter results and take cues from the management commentary, he said.
“While Bajaj Finance is trading at higher levels compared to HDB Financial Services, the other NBFC players are trading at cheaper valuations,” said Chowdhury.HDB Financial’s IPO was subscribed 16.69 times on the final day of bidding on Friday.The qualified institutional buyers (QIBs) portion was subscribed 55.47 times, while the non-institutional investors (NIIs) or high-net-worth individuals’ portion and the retail investors portion were subscribed at 9.99 times and 1.41 times, respectively.
The NBFC’s market capitalisation on Wednesday was Rs 69,704.3 crore while the market value of its largest peer, Bajaj Finance stood at Rs 5.73 lakh crore.
Analysts said the company’s peer Bajaj Finance has been able to maintain high growth and high asset quality which HDB hasn’t been able to achieve. “Investors are advised to exit post listing gains as the company’s financials aren’t that great relative to its peers,” said Dharmesh Kant, head of research, Cholamandalam Securities. “While other NBFC stocks are expensive, the relative growth trajectory is also likely to be better which makes them a better bet.” Despite good issue price, HDB Financial Services needs to demonstrate strong growth in consumer finance which makes up almost 24% of its book and remains a grey area for the company,” he said
Kant said investors can wait for a better opportunity to buy HDB Financial services and also for the other NBFCs where the valuations have not cooled off yet. Emkay Global initiated coverage on the stock with a ‘Buy’ rating and target price of Rs 900-implying an upside potential of 7.11% from Wednesday’s closing price.
Analysts said investors can hold the stock from a 2-3-year perspective as HDB Financial Services is a structurally constructive bet. “Despite trading at a discount to Bajaj Finance and Cholamandalam Finance, HDB Financial Services is an upper layer NBFC that offers a well-diversified portfolio and a granular loan book that makes it a long term buy for new investors as well,” Shweta Daptardar, VP — institutional equity research, Elara Securities.
Daptardar said fresh investors can accumulate on dips as no returns are expected on an immediate basis, however, no sizable corrections are likely as higher liquidity and low-interest rate scenarios offer better landscape for NBFCs such as HDB Financial Services.
