HDB Financial Services, a subsidiary of HDFC Bank, is gearing up for India’s biggest-ever IPO in the non-bank finance space. Since its founding in 2007, the company has become one of the most prominent retail-focused NBFCs in the country, with over ₹98,620 lakh crore in gross loans and a strong physical and digital footprint.
But beyond its brand and scale, this IPO is also a regulatory milestone: a response to the RBI’s mandate for listing large NBFCs by September 2025. And while it may look like a blockbuster on paper, past IPOs of similar scale offer a cautionary tale.
IPO details
Objective:
HDB Financial Services is raising capital primarily to strengthen its Tier-I capital base. This will support its lending growth across business, vehicle, and consumer loan segments.
The offer also allows HDFC Bank to reduce its holding from 94.32% to 74.19%, as part of the RBI’s directive for Upper Layer NBFCs to list by September 2025.
Additionally, HDFC Bank will be required to bring its stake down further to 40% by September 2029.
About the company:
HDB is a full-spectrum NBFC serving India’s underbanked segments through three key verticals: enterprise lending to MSMEs, asset finance for vehicles and equipment, and unsecured consumer loans. It operates 1,772 branches across 31 states and boasts over 17.5 million customers.
The company’s strategy focuses on small-ticket, granular loans: 71% of which are asset-backed and none of its 13 product categories account for more than 25% of the book, reducing concentration risk. Its digital playbook includes AI-based decisioning, digital onboarding, and a mobile app with nearly 7 million downloads.
As of March 31, 2025, the company’s gross loan book stood at ₹98,620 crore, and AUM at approximately ₹1.07 lakh crore.
Financial performance
HDB has delivered strong revenue growth but muted profit expansion over the past three years. While revenue increased from ₹12,402 crore in FY23 to ₹16,300 crore in FY25, net profit declined by 11.6% in FY25. Gross Stage-3 loans were 2.2% of gross advances in FY25, with unsecured loans forming 26.9% of the book.
The decline in FY25 PAT was due to higher provisioning and operating expenses; a common outcome in fast-expanding NBFCs navigating tighter credit conditions.
Backers and buyers
HDB is a wholly owned subsidiary of HDFC Bank, which enjoys high brand equity and deep customer reach. While the DRHP does not list institutional pre-IPO investors, the business is retail-driven and consumer-facing.
HDFC Bank shareholders are eligible to apply under a special quota, provided they held shares on or before June 19, 2025. The shareholder portion is capped at ₹1,250 crore. Allotment in this category will be proportionate, and investors can still apply under other retail categories without violating multiple bid rules.
The IPO funds will be used for…
The ₹2,500 crore raised via fresh issue will go toward boosting the Tier-I capital base; enabling further lending expansion across the company’s three verticals.
There is no ambiguity in usage: HDB is not funding a specific acquisition or diversification. Instead, the capital supports balance sheet strength and business continuity.
The remaining ₹10,000 crore will go to HDFC Bank as part of the Offer for Sale.
Risk factors
While HDB has delivered stable growth, it is not immune to risks.
First, profitability has declined in FY25, breaking a three-year momentum. Second, 26.9% of the loan book is unsecured; increasing default sensitivity. Third, gross Stage-3 assets at 2.2% may not be alarming, but they are trending upward.
The real caution, however, comes from market context. India’s biggest IPOs: Reliance Power (2008), Paytm (2021), and LIC (2022) all underperformed sharply post-listing, despite record-breaking subscriptions. Most were launched near market highs, just like HDB is now.
Liquidity drain, high pricing (27x P/E, 3.7x P/B), and frothy sentiment are familiar red flags. Investors would be wise to view the listing day with tempered expectations.
The pro factors
HDB enjoys clear advantages: strong parentage, a diversified loan portfolio, high digital adoption, and geographic breadth. It serves a wide and sticky customer base, with 80+ OEM tie-ups and 140,000 dealer points. RBI-mandated listing also adds a layer of regulatory credibility.
As of March 2025, net worth was ₹13,872 crore (pro forma post-IPO), giving the company financial room to scale. Despite recent profit softening, its core business model remains sound and granular.
Final take
HDB’s IPO is a mix of regulation, branding, and scale. It’s not chasing expansion or new ventures; it’s about strengthening what’s already working. But its large size, high valuation, and macro timing raise important questions.
Investors should weigh the company’s operating fundamentals against the lessons from previous mega IPOs. HDB has the right story but whether the stock follows that script is another matter entirely.
FAQs
What is the total size of the HDB Financial Services IPO?
The total issue size is ₹12,500 crore, including a fresh issue of ₹2,500 crore and an offer for sale (OFS) of ₹10,000 crore by HDFC Bank. This makes it the largest NBFC IPO in India to date.
What is the IPO price band and minimum investment?
The IPO is priced between ₹700 and ₹740 per share. Retail investors can apply for a minimum of 20 shares, which translates to ₹14,800 at the upper price band.
When will the HDB Financial IPO open and list?
The IPO will open on June 25, 2025, and close on June 27, 2025. Tentative listing on the BSE and NSE is scheduled for July 2, 2025.
Who is eligible for the HDFC Bank shareholder quota?
Investors who held HDFC Bank shares in their demat accounts on or before June 19, 2025, can apply under the shareholder quota. ₹1,250 crore worth of shares have been reserved for this category.
How will the IPO proceeds be used?
The ₹2,500 crore from the fresh issue will be used to strengthen HDB’s Tier-I capital base, enabling it to support future lending growth. The remaining ₹10,000 crore will go to HDFC Bank as part of the OFS.
Is HDB Financial Services profitable?
Yes, but net profit declined in FY25 to ₹2,175.9 crore from ₹2,460.8 crore in FY24. The drop was largely due to higher provisioning and increased operating costs.
What are the key risks of investing in HDB Financial’s IPO?
Key risks include a rising share of unsecured loans, increasing Stage-3 assets (2.26%), slowing profit growth, and high IPO valuation multiples. Market timing is also a concern given past mega-IPO underperformance.
Will HDFC Bank need to reduce its stake further post-IPO?
Yes. As per RBI rules, HDFC Bank must bring its stake down to 40% by September 2029. The IPO reduces it to approximately 74% initially.
