HDB Financial IPO: Everything you need to know about Rs 12,500 crore issue from HDFC Bank Group

By Admin

05 Jun, 2025

Explore HDB Financial's Rs 12,500 crore IPO backed by HDFC Bank, now SEBI-approved. Discover more about this much-anticipated listing!

A Major Milestone in India’s IPO Landscape

Halfway through 2025, India’s IPO market is teeming with activity, and among the most awaited entries is that of HDB Financial Services. This non-banking financial company (NBFC), a key arm of the HDFC Bank Group, has just received a green signal from the Securities and Exchange Board of India (SEBI) to go public. With a mammoth Rs 12,500 crore IPO, it marks the largest NBFC listing ever and the biggest IPO since Hyundai's in October last year.

IPO Structure: What’s in the Offer?

SEBI’s approval of HDB Financial’s Draft Red Herring Prospectus (DRHP), filed in December 2023, clears the path for this significant issue. The IPO consists of:

• Fresh issue of shares worth Rs 2,500 crore
  
  

• Offer for Sale (OFS) of Rs 10,000 crore by the existing promoter, HDFC Bank
  
  

The OFS will allow HDFC Bank to reduce its stake while bringing in public investors. However, HDFC Bank will remain the dominant shareholder post-listing.

Understanding HDB Financial Services

Founded in 2007, HDB Financial has grown into one of India’s leading non-deposit-taking NBFCs. Recognized by the Reserve Bank of India as an NBFC-Upper Layer (NBFC-UL), the company is subject to stringent compliance and governance norms. With an independent board and management team, it operates with a robust internal control framework.

Its business spans urban centres and deeper Bharat, with a loan portfolio focused on:

• Consumer loans
  
  

• MSME financing
  
  

• Asset-backed lending
  
  

Key Services: A Three-Tier Lending Model

HDB Financial’s strength lies in its diversified business model, split into three lending verticals:

1. Enterprise Lending: Initiated in 2008, this vertical targets MSMEs and salaried professionals with both secured and unsecured loans, including working capital, equipment financing, and office renovation funding.
   
   

2. Asset Finance: Launched in 2010, it supports acquisition of income-generating assets like commercial vehicles, tractors, and construction machinery primarily catering to transporters and small contractors.
   
   

3. Consumer Finance: Offers short-duration loans for purchasing mobile phones, appliances, two-wheelers, and other lifestyle products.
   
   

Additionally, HDB Financial operates in the business process outsourcing (BPO) space, providing backend support to various functions.

Financial Performance: A Robust Growth Story

As of September 30, 2024, HDB Financial has exhibited strong financial fundamentals:

• Gross loan book: Rs 98,620 crore (21% CAGR since FY22)
  
  

• AUM: Rs 90,230 crore
  
  

• Net Profit (FY24): Rs 2,460.8 crore (vs. Rs 1,620 crore in FY22)
  
  

• Return on Assets (ROA): 3.03%
  
  

• Return on Equity (ROE): 19.55%
  
  

• Net Interest Margin (NIM): >7%
  
  

• Gross NPA: 1.90%; Net NPA: 0.63%
  
  

• Provision Coverage Ratio (PCR): 61%
  
  

These numbers reflect operational strength, sound risk management, and sustainable profitability, even amid macroeconomic fluctuations.

Shareholding and SEBI Mandates

Currently, HDFC Bank owns 94.6% of HDB Financial Services. Post-IPO, this stake will reduce likely below 75% in line with SEBI’s mandate for minimum public shareholding in listed companies.

While the bulk of the OFS will come from HDFC Bank, some shares may also be offloaded by early employees and minority investors.

Nationwide Reach and Customer Base

As of September 2024, HDB Financial has a vast physical footprint:

• 1,772 branches across 1,162 cities/towns
  
  

• Present in 31 states and union territories
  
  

• Over 17.5 million active customers
  
  

• ~80% branches located outside India’s top 20 cities, reflecting strong presence in semi-urban and rural markets
  
  

This wide outreach enables the company to tap into underbanked populations, making it a vital player in India’s financial inclusion story.

Final Thoughts

HDB Financial’s IPO represents not just a financial opportunity but also a significant milestone in the Indian NBFC space. With strong parentage, diverse offerings, and solid fundamentals, it is poised to attract wide investor interest. As SEBI approval brings this Rs 12,500 crore issue closer to reality, all eyes will now be on the pricing, timing, and investor response to one of the biggest listings of the year.