HDB Financial Services IPO Review, Allotment Status, Subscription, Price, Date &

Posted by Rajesh Singla on March 18th, 2020

HDB Financial Services Ltd was incorporated in 2007 by HDFC Bank. HDB Financial Services is engaged in the business of financing, collection, and insurance services. HDB Financial Services also carries a business process outsourcing (BPO) business and provides back-office processing services and is also engaged in the business of marketing and promotion of the various financial products. HDB Financial Services is a wholly-owned subsidiary of HDFC Bank which holds 95.87% of HDB Financial Services' equity shares. The product portfolio of HDB Financial Services consists of loans (secured and unsecured), asset finance (commercial vehicle, construction equipment & tractor loans), sales finance, fee-based products (insurance services) and BPO Services. HDB Financial Services has 1151 branches in 815 cities in India and has its data centre at Bengaluru and centralised operations in Hyderabad and Chennai.

Roughly ₹ 54,700 crores in loans are spread across three major segments namely consumer loans, enterprise loans and asset finance.

Asset financing, which includes commercial vehicle, commercial equipment and tractor loans, made up 41 %of HDB Financial’s loan book in the last financial year and growing asset finance book by 50-60% year-on-year to build a more diversified loan book.

The loans-against-property segment was the second-highest contributor to HDB Financial’s total loan book at 34%. Unsecured Business loans and other secured loans make up the rest of the book. The overall quality of the loan book remains strong, with more than ₹ 41,000 Crores worth loans backed by mortgage and other assets.

HDB Financial Services operates through a network of 1165 branches, located in 831 cities and towns across the country. HDB Financial Services is a corporate agent for HDFC Standard Life Insurance Company and HDFC Ergo General Insurance and distributes their insurance products. All bank facilities are AAA rated by credit rating agencies (CARE and CRISIL).

HDB Financial Services benefits from HDFC’s nationwide presence, network, brand recognition, and has the advantage of leveraging the expertise of the bank’s senior management who are represented on the board of HDB Financial Services. Based on FY20 growth estimates, HDB Financial would account for 6 % of HDFC Bank’s Billion market capitalisation, which works out to a valuation of about .5 Billion.

HDB Financial Services is soon planning to come out with its IPO and HDB Financial Services is a hot commodity in the grey market and when it will come out with its IPO it will attract a lot of retail investors attention, HDB Financial Services is getting a very attractive valuation before the IPO.

Further, it is also expected that HDB Financial Services will come up with its IPO by the end of this year. Due to its association with the HDFC group HDB Financial Services will enjoy some premium in its share price and therefore one cannot say that HDB Financial Services is overpriced.

HDB Financial Services IPO date has not been released yet. Once the IPO date has been issued, the subscription details will be updated regularly. The Allotment status will be announced about 3-4 weeks of the IPO issue date. The price band of the IPO will be known only after the offer price of the IPO issues is known. One can know about the price band of the IPO in about a week.

Planify View Over HDB Financial Services:

• HDFC Bank Ltd. Which is also a parent company owning more than 95.87 % of HDB Financial Services.
• It ranked 6th position among top non-banking Financial Companies of India.
• Company has Received AAA/Stable rating from both agency CARE and CRISIL.
• This year HDB Financial Services has decided to pay the dividend of 18% on face value of 10 Rs.
• It also distributes general and life insurance products for HDFC Ergo and HDFC standard insurance companies.
• If we see the overall financial health of HDB Financial Services is quite good and it is already outperforming among its peers because of its business model, management power and the trust of the parent company.
• We at Planify Rate is 4 out of 5 and strongly recommend this share for long and short term.

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