HBD Financial Services' much-anticipated IPO is set to launch on June 25th, but concerns are already rising among investors. Reports suggest that approximately 48% of the 49,336 initial investors may face significant losses.
New Delhi: The Initial Public Offering (IPO) of HBD Financial Services Limited, a prominent non-banking financial company in India, will open to investors on June 25th, 2025. However, this IPO is generating anxiety rather than excitement, particularly for investors who purchased shares at higher prices during the unlisted phase.
IPO Size and Structure
The company is launching a total IPO of ₹12,500 crore. This includes a fresh issue of ₹2,500 crore and an offer for sale (OFS) of ₹10,000 crore by HDFC Bank Limited, HBD's parent company.
HDFC Bank will sell approximately 13.51 crore shares under this issue. These shares were previously purchased at ₹46.4 per share and will now be offered at an upper price band of ₹740.
Concerns for Early Investors
According to HBD's red herring prospectus, as of June 19th, 49,553 individual investors already hold shares. These investors purchased shares in the unlisted market at rates ranging from ₹1,200 to ₹1,350. With the IPO price band set at ₹700-₹740, they could face losses ranging from 38% to 48%.
For instance, an investor owning 1 crore shares at ₹1,250 per share has an investment of ₹1,250 crore. If these shares are listed at ₹740, their value drops to ₹740 crore, resulting in a potential loss of ₹510 crore.
Significant Gains for HDFC
While smaller investors face potential losses, HDFC Bank stands to gain significantly from this issue. If the shares purchased at ₹46.4 are sold at ₹740, the bank will realize a pre-tax profit of approximately ₹9,373 crore.
Mandatory Listing Due to RBI Guidelines
The primary reason for this IPO is a guideline issued by the Reserve Bank of India (RBI) in October 2022. The guideline mandated that all Non-Banking Financial Companies (NBFCs) in the "upper layer" must be listed on a stock exchange by 2025. This is why HBD is entering the stock market, despite market conditions being unfavorable for early investors.
Caution for Investors
Experts believe that shares purchased at high prices in the unlisted market will be significantly lower than the listed price. This valuation gap poses a serious risk to investors.
Informed Investment is Crucial
Analysts advise investors to avoid being swayed solely by the IPO's appeal. They should thoroughly understand the company's current financials, business model, NPA levels, return on assets, and future plans.
Company Business and Future Prospects
HBD Financial Services operates in retail lending, consumer loans, commercial loans, and SME finance in India. The company focuses on digital lending and consumer-centric products. However, given the current market conditions and intense competition, investors should proceed with caution.
Key Facts at a Glance
Subject Details
IPO Opening Date June 25, 2025
IPO Closing Date June 27, 2025
Price Band ₹700 - ₹740 per share
Fresh Issue ₹2,500 crore
OFS ₹10,000 crore (by HDFC)
Unlisted Purchase Price ₹1,200 - ₹1,350 per share
Potential Loss 38-48% (for early investors)
Beneficiary HDFC may profit ₹9,373 crore
