MUMBAI: HDB Financial Services, the non-banking lending arm of HDFC Bank, made a stellar market debut on Wednesday despite a bleeding market, emerging as the eighth most valuable shadow bank, with shares listing at a 13% premium over the issue price of Rs 740.
The stock opened at Rs 840 and touched a high of Rs 851.40 before closing at Rs 840.90, up 13.55% on the NSE, valuing the firm at Rs 69,625 crore at close.
The broader market bled throughout the day and closed with a 0.35% loss, after having dropped nearly 1% intra-day.
Last week, when the company hit the market with a Rs 12,500 crore IPO, it marked the largest primary share sale in the NBFC space. The issue comprised aRs 10,000 crore offer for sale by HDFC Bank, which held a 93.45% stake in the company pre-issue now reduced to 75% and a fresh issue by the company to the tune of Rs 2,000 crore.
The issue, which was open from 25 to 27 June, saw robust demand with a subscription of nearly 16.7 times. It was prompted by an October 2022 RBI directive mandating all upper-layer non-banks to be listed.
Bajaj Finance remains the most valuable shadow bank, with a market capitalisation in excess of Rs 5.81 trillion, followed by Jio Financial Services and Cholamandalam Investment and Finance Company, valued at Rs 2.08 trillion and Rs 1.37 trillion respectively.
Others include Shriram Finance (Rs 1.33 trillion), Muthoot Finance (Rs 1.06 trillion), SBI Cards & Payment Services (Rs 90,481 crore), and Aditya Birla Capital (Rs 72,200 crore).
Brokerage Emkay Global, in a report, said it is bullish on the company, highlighting its highly diversified and granular lending model. The firm boasts a customer base of over 1.9 crore and has weathered multiple credit cycles including the pandemic building its franchise from the ground up, the report noted.
Emkay also pointed out the company’s minimal concentration risk—its top 20 accounts comprise just 0.34% of total assets and has issued a ‘buy’ call with a target price of Rs 900 per share, implying a potential 22% upside over the issue price of Rs 740.