HDFC Bank-backed retail-focused NBFC company debuts on BSE & NSE; Jumps 14.93 per cent to intraday high!
On Wednesday, the stock market was trading in the red, with the BSE Sensex Index down 0.34 per cent at 83,410 and the NSE Nifty-50 Index down 0.35 per cent at 25,453.
On Wednesday, the stock market was trading in the red, with the BSE Sensex Index down 0.34 per cent at 83,410 and the NSE Nifty-50 Index down 0.35 per cent at 25,453. Amidst this downturn, shares of HDB Financial Services Ltd, the HDFC Bank-backed retail-focused NBFC, made a strong debut on both the BSE and NSE. The stock jumped 14.93 per cent from its IPO price of Rs 740 per share to an intraday high of Rs 850.45 per share on the BSE, where 78.5 lakh shares changed hands.
HDB Financial Services Ltd (HDBFSL), incorporated in 2007, stands as a prominent retail-focused Non-Banking Financial Company (NBFC) and a key subsidiary of HDFC Bank Ltd. Recognised by the RBI as an Upper Layer NBFC (NBFC-UL), HDBFSL is among India's largest diversified NBFCs based on its gross loan book. The company recently announced an initial public offering (IPO) with an issue size of Rs 12,500 crore, which includes a fresh issue of Rs 2,500 crore (3.38 crore shares) and an offer-for-sale (OFS) of Rs 10,000 crore (13.51 crore shares) by HDFC Bank. HDBFSL's diverse portfolio spans three core lending verticals: Enterprise Lending, offering secured and unsecured loans to MSMEs and salaried individuals; Asset Finance, providing financing for commercial vehicles, construction equipment, and tractors; and Consumer Finance, covering loans for autos, consumer durables, and digital/lifestyle products. Beyond lending, HDBFSL also provides BPO services to HDFC Bank and distributes fee-based products like insurance to its customers. The company emphasizes serving underserved markets through a robust "phygital" distribution network of 1,771 branches and 1,170 operational locations across India, with over 80 per cent located in non-metro areas, complemented by the digitisation of over 95 per cent of its customer onboarding and collections processes.
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Financially, HDBFSL reported strong operational growth in FY25, with Revenue from Operations increasing 15 per cent year-over-year to Rs 16,300.28 crore from Rs 14,171.12 crore in FY24, continuing a consistent upward trend since FY23. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) also rose 14 per cent year-over-year to Rs 9,512.37 crore, maintaining a stable margin of 58.36 per cent, largely consistent with FY24. However, the company experienced a 12 per cent year-over-year decline in Net Profit, which fell to Rs 2,175.92 crore in FY25 from Rs 2,460.84 crore in FY24. This led to a contraction in the Net Profit Margin to 13.35 per cent from 17.37 per cent, likely due to factors such as higher provisions, increased costs, or tax impacts. Consequently, basic Earnings Per Share (EPS) dropped to Rs 27.40 from Rs 31.08, while diluted EPS decreased to Rs 27.32 from Rs 31.04.
Despite the pressure on its bottom-line margins, HDBFSL's healthy revenue and EBITDA growth indicate robust operational performance. Sustaining investor confidence going forward will largely depend on a recovery in net profit. In comparison to its peers, which include leading NBFCs such as Aditya Birla Finance, Bajaj Finance, and Shriram Finance, HDB Financial Services exhibits a balanced profile characterised by moderate growth, controlled asset quality, and reasonable profitability. While not as aggressive as some high-growth competitors, its valuation appears fair relative to its performance, positioning HDBFSL as a stable, mid-tier player within the competitive Indian NBFC segment.
Disclaimer: The article is for informational purposes only and not investment advice.