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HDB Financial Services, the non-banking finance subsidiary of HDFC Bank, is gearing up for an initial public offering (IPO) and is currently in discussions with global investment banks such as Bank of America Securities, Morgan Stanley, and Nomura to finalize advisors. The IPO is expected to raise approximately ₹10,000 crore by diluting about 10% of its equity. This move aligns with the Reserve Bank of India’s (RBI) regulatory requirements for non-banking financial companies (NBFCs) classified in the upper layer, which mandates them to go public by September 2025.
The IPO process, which has been approved in principle by the HDFC Bank board as of July 20, will be overseen by a committee of directors. The decision to list is viewed as timely, given the favorable market conditions, according to sources familiar with the matter. HDFC Bank currently holds a 94.6% stake in HDB Financial Services, and the company is valued at around ₹90,000 crore ($10.7 billion) in the grey market, with shares trading at ₹1,130-1,140 apiece.
HDB Financial Services, which specializes in vehicle loans, personal loans, and loans against property, has reported a 3.2% year-over-year increase in revenue to ₹2,390 crore and a 2.6% rise in profit after tax to ₹580 crore for the June quarter. The company’s total loan portfolio stood at ₹95,600 crore at the end of June, up from ₹73,600 crore a year ago. Its total capital adequacy ratio (CAR) is 18.8%, with a tier 1 CAR of 14%. The percentage of Stage 3 loans, or loans overdue by 90 days or more, is at 1.93% of the gross loans.
HDB is in the advanced stages of appointing lead managers for the IPO after obtaining approval from HDFC Bank. The NBFC had indicated readiness for the IPO in June, stating that it is well-prepared from a compliance, documentation, and reporting standpoint since it is already debt-listed. The company also plans to expand its branch network by opening nearly 200 new branches this fiscal year, in addition to its existing 1,600 branches, to support growth in its loan book.
While the talks with potential advisors are still in preliminary stages, more banks might join the effort, with final decisions expected in the coming weeks. Neither HDB Financial Services, HDFC Bank, Morgan Stanley, nor Nomura responded to requests for comments, while Bank of America Securities declined to comment.
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