HDB Financial Services, a prominent NBFC under the HDFC Group umbrella, recently made headlines by launching India's largest-ever NBFC IPO worth ₹12,500 crore. Of this, ₹2,500 crore is a fresh issue while the remaining ₹10,000 crore came via Offer for Sale (OFS) by HDFC Bank. In an exclusive interaction, the company’s leadership shared a comprehensive insight into the IPO details, capital utilization, investor sentiment, business differentiation, and future strategy.
Capital Allocation from ₹2,500 Crore Fresh Issue
The ₹2,500 crore fresh issue component of the IPO is primarily allocated for business expansion and strengthening Tier 1 capital. The company expects this capital to support its growth trajectory for the coming years. The CEO reiterated their disciplined approach and commitment to using this capital prudently to continue building long-term value.
Investor Response and Valuation Discussion
The IPO saw overwhelming investor interest with over 22 lakh retail shareholders applying, making it the most subscribed billion-dollar IPO in the last four years. Addressing questions around valuations and share price trends—from grey market rates to listing price—the CEO emphasized that HDB is not a startup but a 17-year-old company built with discipline through various economic cycles. The focus is on building long-term value as part of the HDFC Group legacy rather than short-term valuation gains.
Not Just a Product Company – Serving Aspirational India
HDB Financial Services has consciously positioned itself as a customer-focused rather than a product-centric company. The leadership clarified that this was a deliberate strategy to cater to "Aspirational India." The company regularly launches new products based on evolving customer needs, ensuring broad inclusivity across demographics and geographies.
HDFC Bank’s Role Post IPO
Post IPO, HDFC Bank's stake in HDB Financial Services now stands at 74%, which complies with the 25% minimum public shareholding norm. The bank remains a promoter and plans to stay invested in the long term. The management confirmed that there are no immediate plans for further stake reduction.
Unsecured Loan Book and Risk Management
Approximately 27% of the company’s loan book is unsecured—a figure that has historically remained between 25% to 30%. The CEO noted that unsecured lending is a domain the company understands well, having operated in this space since 2008. With deep geographic presence and robust underwriting practices, they are comfortable with maintaining this share in the unsecured portfolio in the near future.
Gross NPA Strategy and Direct Model Advantage
Risk management lies at the core of HDB’s business model. The company operates largely through direct origination, underwriting, and collections—enabling real-time market insight and control. The management believes this direct model allows them to actively respond to market shifts and ensure stability in Gross NPA levels.
Fundraising Strategy and NCD Market Presence
In terms of future fundraising, the primary borrowing channel remains the debt capital markets. HDB is one of the largest issuers of Non-Convertible Debentures (NCDs), particularly in the 2-3 year bucket. The company maintains a positive cumulative Asset Liability Mismatch (ALM) position up to five years and avoids taking undue risks related to interest rates or liquidity. It works with more than 20 banks and holds AAA ratings from CRISIL and CARE, reflecting strong financial discipline.
How HDB Differentiates Itself
HDB’s competitive edge lies in its diversified business model across customers, products, and geographies. It operates in over 1170 cities and serves nearly 19 million customers. This breadth of presence and product range allows the company to serve a wide spectrum of financial needs while maintaining risk diversification.
RBI Draft Guidelines and Holding Structure
Regarding the Reserve Bank of India’s draft guidelines that potentially impact companies with parent-subsidiary business overlap, the CEO acknowledged the draft stage of the regulation. The company has submitted its feedback and is awaiting the final circular. No definitive stance was taken at this stage, but the management promised to return with updates once the final guidelines are issued.
Passing on Rate Cut Benefits to End Customers
In alignment with RBI and government directives to ensure rate cut benefits reach end customers, HDB aims to maintain uniform service standards across locations—from metros like Mumbai to remote areas like Jorhat or Jammu. As a responsible lender, HDB takes a balanced view of creditworthiness, intent, and loan usage. The company’s pricing approach is designed to be fair and responsible, consistent with its HDFC heritage.
HDB Financial Services’ landmark IPO and strategic clarity mark a significant moment in India’s financial sector. With its disciplined approach, deep presence, and diversified offerings, the company is poised to continue delivering long-term value while maintaining financial prudence. As it navigates regulatory changes and evolving market dynamics, its strong foundation and customer-first philosophy position it well for sustainable growth.
Disclaimer:
This blog is for informational purposes only. The views and statements mentioned are based on a public interview and should not be considered as investment advice. Readers are advised to consult their financial advisor before making any investment decisions.
