The much-awaited HDB Financial Services IPO is finally opening on June 25th. With an IPO size of ₹12,500 crore and a price band of ₹700 to ₹740 per share, this offering has become the talk of the town. The excitement is natural because this company belongs to one of India’s most trusted financial groups — the HDFC Group. After HDFC Bank, HDFC Life, and HDFC AMC, HDB Financial becomes the fourth company from the HDFC stable to get listed on the stock market.

Many retail investors are highly optimistic about this IPO. The general sentiment is that being part of the HDFC group ensures strong listing gains and long-term security. People are rushing to apply, expecting solid short-term returns. And to some extent, this approach is not wrong — if you are applying with the intention of only earning IPO listing gains, then it may work out well for you. But if you are someone who is planning to invest in HDB Financial Services with a medium to long-term view of 2-3 years or more, then you must consider some important realities before making your decision.

One key thing to remember is that whenever an IPO comes from a trusted and big business house, the biggest advantage is that your invested capital is generally secure. These companies have stable businesses, strong balance sheets, and good governance standards. But because these businesses focus heavily on safety and stability, they usually do not generate very high returns in the short run. They avoid taking high risks, and naturally, their profit margins do not expand dramatically in a short span of time.

For example, look at LIC, which got listed in May 2022. Being a government-owned giant with a huge customer base, LIC was considered a safe bet at the time of listing. However, since its listing, LIC stock has given only around 13% return in over three years. If you had kept your money elsewhere, you might have earned much higher returns over the same period.

Another example is Bajaj Housing Finance, which got listed in September 2024. Despite coming from another reputed financial group, this stock has delivered a negative return of nearly 27% as of June 2025. This again proves that large, stable companies may not give strong returns in the short-term because their business model focuses on steady growth rather than aggressive expansion.

The same logic applies to HDB Financial Services. It is a well-managed, transparent, and secure company. The management is reputed, governance is strong, and operations are consistent. However, its growth trajectory may not be as aggressive as small or mid-cap companies that operate in high-risk, high-reward segments. The business strategy of such companies revolves around controlled growth, low-risk lending, and long-term stability. Therefore, the profit margins may not expand sharply in a few years.

So, if your goal is to apply for the HDB Financial IPO purely for short-term listing gains, you can go ahead. The demand, brand trust, and market buzz may help the stock open higher on listing day. But if your goal is to hold it for 2-3 years expecting 25%-30% annual returns, you might be disappointed. These companies grow slowly like an elephant — stable, steady, but not very fast.

However, if you are a long-term investor looking for consistent growth over the next 10-15 years, then HDB Financial could be a good addition to your portfolio. In the long run, companies with solid management, transparent operations, and stable businesses tend to deliver healthy returns due to compounding and business consistency. Over a decade, such businesses can generate wealth while protecting your capital.

In summary, the HDB Financial IPO offers different opportunities for different types of investors. For quick gains, it might be attractive at listing. For short-to-medium term holding, one should moderate return expectations. But for long-term wealth building, it can be a strong and reliable investment option thanks to the reputation of the HDFC group and the company's sound business fundamentals.

Disclaimer:
This article is for informational purposes only and does not constitute investment advice. Readers are advised to do their own research or consult a financial advisor before making any investment decisions. The stock market is subject to risks and past performance is not indicative of future returns.