HDB Financial Services Stares at 8% Listing Bump Despite Robust IPO Buzz

HDB Financial’s mega Rs 12,500-crore public offer closed the doors for bidding last week with a bang, drawing in investors who subscribed to the issue nearly 17 times. The solid subscription numbers are a big win, especially for an IPO of this scale, making HDB Financial the third most subscribed issue among offerings with a size over ₹10,000 crore.

But while investors showed immense enthusiasm in the primary market, sentiment in the grey market has been rather lukewarm. Even with strong subscription numbers for the IPO, the grey market premium for HDB Financial’s unlisted shares hasn’t moved a needle, standing firm at around 8% or around Rs 800, comparable to recent days. Going by how things currently stand, HDB’s market debut is likely to witness a cold listing pop, despite the buzz around its IPO.

The Grey Market Premium refers to the unofficial price at which IPO shares change hands before they’re listed on the exchange. Though it offers a glimpse into investor mood, it is part of an unregulated space, making it more a barometer of sentiment than a reliable predictor of actual listing performance.

That said, HDB’s grey market premium has undergone a rollercoaster ride in the last one month, going from a peak of around Rs 1,500 to now hovering around Rs 800. Grey market investors of HDB Financial had hopped on the opportunity to acquire unlisted shares of the NBFC firm in the hopes of making a bounty off its market debut.

In the run-up to HDB’s imminent arrival in the primary market, several investors had rushed on to buy its unlisted shares at prices as high as Rs 1,500 per share, betting on the company’s strong financials, growth prospects and the HDFC brand tag. Ahead of the IPO, employee holdings were frozen, further constraining supply and driving up prices in the unlisted market.

However, the greed for easy money soon turned into a costly nightmare after HDB announced a price band of Rs 700-740 for its IPO, leaving those pre-IPO investors in a pool of losses even before the stock sets a foot on Dalal Street.

For many pre-IPO investors, this came as a rude awakening, one that pushed them into the red even before the stock’s market debut. What began as a bet for easy gains quickly turned into an expensive lesson in pre-listing speculation.

With several early investors, particularly in the grey market, now sitting on paper losses, it is little surprise that the GMP has cooled off significantly since the price band announcement. Yet, not all is lost.

Market analysts believe that the current valuations for HDB Financial are fair, and in fact, may offer a more grounded entry point for new investors. Most brokerages recommend that those who are allotted shares hold them with a long-term view, while investors who missed out in the IPO keep an eye out for buying opportunities on dips. On that account, the allotment for HDB’s is currently underway, with the stock slated for a market debut on July 2.