HDB Financial Services IPO opens: Planning to apply? Check 10 risk factors from RHP

The price band for the offer has been fixed at ₹700-₹740 per share. At the upper end of the price band, the company is valued at nearly ₹61,400 crore.

The IPO is a combination of a fresh issue of equity shares worth ₹2,500 crore and an offer for sale (OFS) of ₹10,000 crore by promoter HDFC Bank. At present, HDFC Bank holds a 94.36% stake in HDB Financial Services.

HDB Financial Services' maiden public issue will open for subscription on June 25 and conclude on June 27, while the bidding for the anchor investor will open for a day on June 24, the company announced.

The company proposes to utilise the proceeds from the fresh issue to strengthen its Tier-I capital base. This will support future capital needs, including additional lending, to support business growth.

• HDB Financial says its promoter may be required to significantly reduce its ownership in the company, i.e., to less than 20% (or any such higher percentage with prior RBI approval) on account of overlapping business with its promoter and one of the members of its promoter group if the draft circular issued by the RBI on October 4, 2024 is implemented in its current form, which may have a material adverse impact on our business operations, financial position and share price;

• The company says its gross stage 3 loans amounted to 2.26% of total gross loans as of March 31, 2025, which was an increase from 1.90% as of March 31, 2024. "Non-payment or default by our customers, our inability to provide adequate provisioning coverage for non-performing assets or change in regulatorily mandated provisioning requirements may adversely affect our financial condition and results of operations," the company says;

• As of March 31, 2025, unsecured loans comprised 26.99% of its total gross loans, which is a decrease from 28.66% as of March 31, 2024. HDB Financial Services says its unsecured loan portfolio is not supported by any collateral that could help ensure repayment of the loan, and in the event of non-payment by a borrower of one of these loans, the company may be unable to collect the unpaid balance;

• The company says that as of March 31, 2025, secured loans comprised 73.01% of its total gross loans. "The value of collateral for our secured loans may decrease or we may experience delays in enforcing collateral, impacting our ability to fully recover the collateral value, thereby exposing us to potential loss that could adversely affect our business, results of operations, cash flows and financial condition," it says;

• HDB Financial says it may face asset-liability mismatches in the future, which may cause liquidity concerns and consequently affect its profitability, cash flows, business, results of operations and financial condition;

• "Our Company, Promoter and Directors are involved in certain legal proceedings, including actions taken and penalties imposed by relevant regulatory authorities, and any adverse outcomes in such proceedings may have a material adverse effect on our reputation, business, results of operations, cash flows and financial conditions," it says;

• The company has incurred negative cash flows from operating, investing and financing activities in fiscal 2023 and may continue to do so as it invests in further expanding its distribution network in India;

• The IPO consists of an offer for sale, the proceeds of which will not be available to the company;

• "We provide business process outsourcing (“BPO”) services such as back office, sales support and collection services to our Promoter, HDFC Bank, and the profit before tax from BPO services was 2.44% of the total profit before tax of our Company as of March 31, 2025. Discontinuation of such services to HDFC Bank may adversely impact our business, results of operations and financial condition," and

• The company says it relies on the parentage of its promoter. However, the interests of the promoter as its controlling shareholder may conflict with the company's interests or the interests of its other shareholders. Currently, HDB Financial Services offers the same products as those offered by our Promoter and certain members of our Promoter Group, namely, HDFC Sales Private Limited and HDFC Securities Limited.