HDB Financial Services Makes Modest Dalal Street Debut at 13% Premium

HDB Financial Services, the long-awaited listing from India’s top private lender’s stable, has finally hit Dalal Street. HDB Financial Services opened at ₹835 on the BSE, well above the issue price of ₹740. On the NSE also, it listed at ₹835, a 13% premium to the issue price. By 10:02 am, the stock touched its intraday high of ₹849.85 on the NSE, up 15% from the listing price.

For HDFC Bank, it’s the first public float from the group in over six years, and for the market, it’s a test of confidence in the next big player in India’s booming financial services story.

Earlier, the company’s shares were trading at a premium of ₹68, suggesting a possible listing price of around ₹808, up 9% over the issue price of ₹740.

The ₹12,500-crore IPO of HDB Financial Services, which closed for subscription last week, saw a robust 17 times subscription, driven largely by institutional players. The Qualified Institutional Buyers segment witnessed an overwhelming response, with bids coming in at 55 times the shares on offer, while the non-institutional investor portion was subscribed 10 times. Retail investors, however, approached the issue with relative caution, bidding for just 1.4 times the shares reserved for them.

Life Insurance Corporation of India received a majority of the shares issued in the anchor investors segment. The insurer was issued 6.5% of the total anchor book worth nearly ₹220 crore.

The issue comprised of fresh issue of shares worth ₹2,500 crore and an offer for sale worth ₹10,000 crore. The non-banking financial arm of HDFC Bank had said that the net proceeds from the fresh issue of shares will be utilised in augmentation of its Tier – I capital base to meet the NBFC’s future capital requirements including onward lending.

Emkay Global has initiated its coverage on the stock with a ‘buy’ rating, and a price target of ₹900 per share, implying a potential upside of 22% from HDB Financial’s issue price.