HDB Financial Services stock lists at 13% premium on NSE, Emkay initiates with ‘buy’ rating

Shares of non-bank arm of HDFC Bank, HDB Financial Services, debuted on bourses at a 13 per cent premium on Wednesday.

Post-listing, the stock rose 1.09 per cent on the NSE to ₹844.10 as at 12.12 pm. On the BSE, it rose 1.08 per cent to ₹844.

It debuted at 12.84 per cent premium on the stock exchanges at ₹835 against the IPO price of ₹740

Tarun Singh, MD and Founder, Highbrow Securities, said, market appears to have carefully weighed its dual proposition, the stability of HDFC lineage against the challenges of a maturing NBFC sector.

The moderate premium, according to Singh suggests the street views this as a steady compounder rather than a high-growth story a fair assessment given its 14 per cent RoE and diversified book.

Emkay Global has initiated coverage on the stock at a target price of ₹900, nearly 8 per cent upside potential from the listing price.

The IPO was subscribed 16.69 times, with robust institutional interest. The ₹12,500 crore IPO comprised of fresh issue worth ₹2,500 crore and an offer-for-sale of up to ₹10,000 crore by HDFC Bank.

“With a favorable interest rate cycle amid frontloaded repo rate cuts driving NIM expansion, credit cost moderation, and the growth outlook improving, HDBFS is well-positioned to improve profits/growth, to achieve RoA of 2.7 per cent / RoE of 17 per cent by March 2028, and deliver 20 per cent AUM or 27 per cent EPS CAGR over FY25-28E,” Emkay said.

The brokerage highlighted the positives such as AUM strength, and customer base. The diversified product mix and continued focus on the overlooked segments should support steady, 20 per cent AUM compounding to ₹1.8 trillion over FY25-28, it added.

Citing the RBI’s October 2024 draft circular demand no overlap in business between the bank and its subsidiary, Emkay also flagged, HDFC Bank might have to reduce its ownership in HDB Financial to under 20 per cent within a specified duration.

Nitin Jain, Sr. Research Analyst at Bonanza, said, the company is well-prepared to boost growth and profitability, amid favorable interest rate environment supported by front loaded repo rate cuts facilitating net interest margin expansion, reduced credit costs and enhancing growth outlook.

The listing outcome validates institutional confidence in HDB’s pan-India distribution and RBI-compliant structure, while simultaneously acknowledging retail investors’ prudent hesitation at current valuations. Singh of Highbrow Securities added.

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Published on July 2, 2025