Is HDB Financial IPO a Disappointment for Early Investors?
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Synopsis
The HDB Financial IPO, initially anticipated to be a lucrative venture for early investors, has quickly shifted to a source of disappointment, with potential losses of up to 52%. As the stock price falls below expectations, investors are left questioning their financial decisions.
Key Takeaways
- Initial pricing significantly lower than expectations.
- Investors face notable losses before listing.
- Importance of market research and due diligence.
- Subscription rates indicate varying investor confidence.
- Historical precedents highlight IPO volatility.
Mumbai, June 26 (NationPress) The initial public offering (IPO) of HDB Financial Services, initially perceived as a remarkable opportunity for early investors, has become a source of disillusionment for those who invested prior to the IPO.
The public offering, valued at Rs 12,500 crore, has been set at a price range of Rs 700 to Rs 740 per share, which is substantially lower than what many had anticipated and recent grey market valuations.
Reports indicate that unlisted shares of the company were trading at approximately Rs 1,225 just moments before the IPO announcement.
Investors who entered the market at even higher prices, some paying as much as Rs 1,550, now face potential losses of up to 52 percent even before the stock is listed.
The latest Red Herring Prospectus (RHP), filed on June 19, reveals that 49,553 individual shareholders acquired HDB shares through private transactions at prices between Rs 1,200 and Rs 1,350.
With the IPO now priced well below these levels, investors are witnessing their expected returns diminish.
For instance, an investor who purchased 1 crore shares at Rs 1,250 each would have invested Rs 1,250 crore.
At the IPO price of Rs 740, the value of those shares would plummet to Rs 740 crore, resulting in a notional loss of Rs 510 crore.
This situation is not unprecedented. Earlier in 2023, shares of Swiggy were exchanged in the unlisted market for over Rs 500 prior to its IPO, but the stock now trades at around Rs 400.
HDB’s IPO comprises a fresh issue worth Rs 2,500 crore alongside an offer-for-sale (OFS) of Rs 10,000 crore from its parent, HDFC Bank.
The bank is selling 13.51 crore shares, which it purchased at an average cost of just Rs 46.4, anticipating a pre-tax profit exceeding Rs 9,300 crore.
HDB aims for a post-money valuation of roughly Rs 62,000 crore, or around $7.2 billion, at the upper end of the IPO price range.
On the second day of HDB Financial Services' Rs 12,500 crore IPO, the non-institutional investors (NII) segment was fully subscribed. Overall, the issue has been subscribed to 67 percent so far, with the retail investors' portion seeing nearly 49 percent subscription.
Point of View
The HDB Financial IPO serves as a cautionary tale for investors. Market enthusiasm can quickly shift, demonstrating the volatility and unpredictability of public offerings. Investors should always conduct thorough research and be prepared for market fluctuations.
NationPress
26/06/2025
Frequently Asked Questions
What is the HDB Financial IPO?
The HDB Financial IPO is a public offering valued at Rs 12,500 crore, offering shares priced between Rs 700 and Rs 740.
Why are early investors disappointed?
Early investors are disappointed because the IPO price is significantly lower than previous trading levels, leading to potential losses.
What is the subscription status of the IPO?
As of the second day, the IPO has been subscribed to 67%, with the non-institutional investors segment fully subscribed.
What is the expected impact on HDB's valuation?
HDB aims for a post-money valuation of around Rs 62,000 crore at the upper end of the IPO price range.
What can investors learn from this situation?
Investors can learn the importance of market research and the potential risks associated with public offerings.
