HDB Financial IPO: The Dream Child of Aditya Puri That’s Now India’s Largest NBFC Listing

When India’s most trusted and largest private sector bank backs an IPO, the market sits up and takes notice. And when that IPO is of its own subsidiary, the excitement only builds. 

That’s exactly what’s happening with the much-anticipated listing of HDB Financial Services, the non-banking financial (NBFC) arm of HDFC Bank that it has been nurturing since 2007.

This isn’t just another IPO. HDB Financial was the brainchild of Aditya Puri, the visionary who transformed HDFC Bank into a household name. His plan was to create a dynamic lending institution that could do what the bank itself couldn’t always do. Because while banks are bound by tighter regulations, NBFCs have the flexibility to lend where banks often hesitate.

It’s no surprise then that many leading banks have created similar step-down subsidiaries to diversify their reach. Take Canara Bank with its housing finance arm, Canfin Homes. Or PNB, which set up PNB Housing Finance to strengthen its foothold in home loans. HDFC Bank’s HDB Financial plays a similar strategic role — helping the bank tap into new customer segments, grow faster, and stay ahead of the curve.

And the timing of this IPO couldn’t have been better. As India moves steadily towards financialisation — with more people saving, borrowing, and transacting digitally — NBFCs like HDB Financial are in the sweet spot, backed by HDFC Bank’s strong parentage, supported by the government’s policy thrust, and powered by digital adoption.

The big question now: will this dream IPO deliver on its promise and add another feather to HDFC Bank’s already glittering cap? Let’s dive in…

Company Profile

HDB is promoted by HDFC Bank. Mr. Ramesh Ganesan is the Managing Director and CEO of HDB, who has been at the helm since 2007 and has previously worked with HDFC Bank as vice president.

HDB Financial Services Management Team

Name	Designation	Joined Since
Ramesh Ganesan	Managing Director and Chief Executive Officer	2007
Rohit Sudhir Patwardhan	Chief Credit Officer	2007
Jaykumar Pravinchandra Shah	Chief Financial Officer	2021
Harish Kumar Venugopal	Chief Risk Officer	2011

Source: Annual Report, RHP

The company’s board is fairly stable with more than 2/3rd representation from independent directors.

HDB Financial – Board of Directors

Name	Designation	Joined Since	Associations with HDFC Bank, if any
Arijit Basu	Part-Time Non-Executive Chairman & Independent Director	June 1, 2021	NA
Amla Samanta	Independent Director	May 1, 2019	Previously on the board of HDFC Bank
A.K. Viswanathan	Independent Director	July 24, 2019	NA
Arundhati Mech	Independent Director	February 11, 2022	NA
Jayesh Chakravarthi	Independent Director	January 25, 2024	NA
Jayant Purushottam Gokhale	Independent Director	September 16, 2024	NA
Bhaskar Sharma	Independent Director	September 16, 2024	NA
Jimmy Minocher Tata	Non-Executive Director (Non- Independent)	July 15, 2023	Chief Credit Officer
Ramesh Ganesan	Managing Director and Chief Executive Officer	July 1, 2012	Worked at HDFC Bank for 8 years

Source: Annual Report, RHP, Equentis

HDB Financial Services manages over Rs 1 lakh crore in assets under management (AUM) as of FY25.

Source: FY25 Annual Report

The company reports its income under three key heads namely: 

• Lending business
• BPO collection services
• Non-interest income (including fee on distribution of insurance products)

Here’s the breakup of its FY25 revenue for each of these segments –

HDB Financial – FY25 Revenue Breakup 

Division	Revenue (Rs. Crore)	Contribution
Lending Business	15,084	91.0%
BPO Services	1,217	7.3%
Insurance Distribution	277	1.7%
Total	16,578

Source: Annual Report

Let’s look at each of these business segments in detail…

1. Lending Business

The company’s lending portfolio is a mix of secured and unsecured loans. Approximately 71% of its loans are secured by assets such as property or vehicles, offering a safety net if borrowers default. The remaining are unsecured loans, which come without collateral but typically earn higher interest rates. This mix provides HDB with a balance of stable, low-risk income and potential for higher returns.

Here’s the breakup of its lending business which includes consumer loans, enterprise loans and asset finance and micro lending.

• Consumer Loans: Under this segment, HDB provides a comprehensive suite of loan offerings designed to support individuals in meeting personal and household financial needs. This includes consumer durable loans for appliances, digital product loans for laptops, phones, personal loans, auto loans, 2-wheeler loans and micro finance lending.

• Enterprise Loans: Here, HDB Financial gives loans to small and micro businesses, enabling them to scale and meet working capital requirements. This includes unsecured loans and loans backed by property, rent, or shares.

• Asset Finance Loans: Under this category, HDB provides customers to purchase new and preowned vehicles and equipment. These loans are structured to promote income generation and business expansion, which includes commercial vehicle loans, construction equipment loans, and tractor loans. 

Here’s how the breakup of its lending business looks like as per its RHP –

HDB Financial – Breakup of Lending Business

Source: RHP

2. BPO Services

Under this segment, the company provides sales support services, back office support, operations support and processing support to its parent HDFC Bank. It has set up 18 call centres nationwide, equipped with 5,500 seats to deliver seamless and efficient collection services. While this segment contributes only 7.3% of HDB’s income as of FY25, it offers a useful additional revenue stream that diversifies its earnings.

3. Sale of Insurance Products

HDB Financial is a registered corporate insurance agent and has a license from the insurance body IRDAI. Under this segment, it sells life insurance and general insurance products of HDFC Standard Life Insurance Company and HDFC Ergo General Insurance Company.

Note that close to 71% of HDB’s branches are located in Tier 3, Tier 4, and rural areas, where there are fewer banking options. This allows HDB to serve underbanked customers and expand in less crowded markets.

Source: DRHP

Over the years, the company has developed a strong franchise and geographical reach with presence in 1,170 locations with a network of 1,771 branches as of March 2025.

Over 80% of these are branches located outside the 20 largest cities in India.

Financial Performance

Coming to its financial performance, HDB’s loan book growth has picked up post pandemic and grown at a healthy CAGR of 21.8% over the past three years.

HDB Financial Loan Book Over the Years

(Rs. Crore)	FY20	FY21	FY22	FY23	FY24	FY25	FY20-25 CAGR	FY22-25 CAGR
Balance Sheet:
Loan Book	57,146	58,601	57,162	66,383	86,721	1,03,343	12.6%	21.8%
YoY Growth		2.5%	-2.5%	16.1%	30.6%	19.2%

Source: RHP, Annual Report

However, some tempering of its net margins earned on loans, also known as NIMs, and reduction in its BPO revenue, has resulted in its total income growing at a CAGR of 13.9%, which is lower than the loan growth but is still a healthy level to maintain.

HDB Financial NIM Over the Years

Profit & Loss:
(Rs. Crore)	FY20	FY21	FY22	FY23	FY24	FY25	FY20-25 CAGR	FY22-25 CAGR
Net Interest Income	4,152	4,605	5,037	5,416	6,292	7,446	12.4%	13.9%
YoY Growth		10.9%	9.4%	7.5%	16.2%	18.3%
Net Interest Margin	7.3%	7.9%	8.8%	8.2%	7.3%	7.2%	7.8%	7.9%
Total Income	10,756	10,945	11,306	12,403	14,171	16,300	8.7%	13.0%

Source: RHP, Annual Report

Coming to its bottomline performance, better cost management and lower provisions have been the key drivers of a robust 29% growth in HDB’s net profits over the past three years.

HDB Financial Net Profit Over the Years

Profit & Loss:
(Rs. Crore)	FY20	FY21	FY22	FY23	FY24	FY25	FY20-25 CAGR	FY22-25 CAGR
Cost to Income Ratio	35.0%	31.9%	36.9%	39.8%	34.8%	29.9%	34.7%	35.3%
Pre-Provisioning Profit (PPOP)	6,987	7,452	7,139	7,470	9,236	11,431	10.3%	17.0%
YoY Growth		6.7%	-4.2%	4.6%	23.7%	23.8%
Credit Cost %	2.5%	5.2%	4.3%	2.0%	1.2%	2.0%	2.9%	2.4%
Net Profit	1,005	391	1,011	1,959	2,461	2,176	16.7%	29.1%
YoY Growth		-61.0%	158.4%	93.7%	25.6%	-11.6%

Source: RHP, Annual Report

HDB Financial IPO Details

HDB Financial’s IPO will open on June 25 and close on June 27, with the anchor portion reserved for June 24.

The IPO is a combination of a fresh issue of Rs 2,500 crore and an offer for sale (OFS) of Rs 10,000 crore from HDFC Bank, which holds a 94.3% stake.

HDB Financial Shareholding Pre-IPO

Group	No. of Shares Held (in Cr)	Shareholding %
HDFC Bank	75.1	94.3%
Public	4.3	5.4%
Shares held by Employee Trusts	0.2	0.2%
Total	79.6

Source: RHP

Post IPO, HDFC Bank’s holding will reduce to 74.2%.

HDB Financial Shareholding Post-IPO

Group	No. of Shares Held (in Cr)	Shareholding %
HDFC Bank	61.5	74.2%
Public	16.9	20.4%
Shares held by Employee Trusts	0.2	0.2%
Total	83.0

Source: RHP

Nearly 50% of the offer is allocated for qualified institutional buyers, 15% for non-institutional bidders, and the remaining 35% for retail investors.

The company has set its price band at Rs 700–740 per share, which surprised many investors, considering the steep valuations HDB Financial was commanding in the unlisted market. Reports suggest that its shares were trading at around Rs 1,250 apiece in the grey market. The IPO price band is nearly 40% lower, leading many investors to view it as an attractive entry point.

Source: sharescart.com

At the upper band of Rs 740 per share, HDB Financial is eyeing a post-issue valuation of Rs 61,388 crore. 

Implied Market Cap of HDB Financial

Particulars	Amount
Fresh Issue Proceeds (Rs. Crore)	2,500
Upper Band Price per Share (Rs.)	740
New Shares Issued (via Fresh Issue) (Crore)	3
Existing Shares Outstanding (Crore)	80
Post-Issue Shares Outstanding	83
Implied Market Cap (Rs. Crore)	61,388

Source: RHP, Equentis

The basis of allotment of HDB Financial shares is expected to be finalised on June 30, with refunds and credit of shares scheduled for July 1. The company is set to debut on BSE and NSE on July 2.

HDB plans to use the money raised from this IPO in two ways:

Building Financial Reserves (Tier-I Capital): HDB will use Rs 2,500 crore from the IPO to boost its Tier-I capital. This is like a financial cushion that helps protect HDB during economic downturns or loan defaults. It will also help the company lend more confidently and meet regulatory requirements.

Offer for Sale by HDFC Bank: The remaining Rs 10,000 crore will go towards HDFC Bank selling part of its stake in HDB to the public. This move will give HDFC Bank extra liquidity and allow HDB to operate more independently in the public market.

Simply put, the fresh funds raised will help strengthen HDB Financial’s capital position, improve its capital adequacy ratio, and support future growth while more importantly, this IPO will also help meet regulatory requirements, as large NBFCs in India are required to get listed by September 2025.

HDB Financial – Key IPO Details

Offer Period	Anchor Book	Issue Open	Issue Close
	24-June-2025	25-June-2025	27-June-2025
Issue Size	Rs 12,500 Crore
Price Band	Rs 700 to Rs 740 per share
Face Value	Rs 10 per share
Lot Size	20 shares and in multiples thereof
Category	Retail	Small HNIs	Big HNIs
Allocation (%)	35%	5%	10%
QIB Portion (%)	50% of the Offer
Listing on	BSE, NSE
Timeline	30-June-2025	Finalisation of Basis of Allotment
	1-July-2025	Initiation of Refunds/Credit of Shares
	2-July-2025	Listing of Shares

Source: RHP

Conclusion

Before the issue opens, HDB Financial shares are trading at a premium of Rs 83 in the grey market. This implies a potential listing price of around Rs 823 — about 11% higher than the upper price band of Rs 740.

At this price range, the price-to-book ratio comes to around 3.9x. 

The biggest question is — is HDB doing anything unique without relying solely on its parent bank’s backing? The HDFC brand definitely helps, but HDB will need to grow rapidly on its own and improve its Return on Assets (RoA) to justify these premium valuations.

Happy Investing.

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