Is HDB Financial IPO Posing Significant Risks for Early Investors?
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Synopsis
The HDB Financial IPO is causing distress among early shareholders, with potential losses of up to 48%. As the IPO price is significantly lower than previous private transaction prices, many investors are facing substantial financial setbacks. Will this affect the overall market perception of HDB Financial Services?
Key Takeaways
- The HDB Financial IPO is valued at Rs 12,500 crore.
- Over 49,000 early investors may face significant losses.
- The IPO price is significantly lower than previous private transaction prices.
- HDFC Bank stands to gain substantial profits from the sale.
- The company's post-money valuation could reach Rs 62,000 crore.
New Delhi, June 20 (NationPress) The impending IPO of HDB Financial Services, valued at Rs 12,500 crore, is raising concerns for a considerable number of early investors.
As detailed in the latest Red Herring Prospectus (RHP) submitted on June 19, more than 49,000 individual shareholders could face notional losses reaching 48 percent.
As of June 19, the firm reported 49,553 individual shareholders.
These investors had acquired HDB shares during previous private transactions at prices between Rs 1,200 and Rs 1,350 per share.
However, with the IPO priced at Rs 700 to Rs 740 per share, these shareholders are witnessing a drastic decline in their investments -- by 38 to 48 percent, depending on their initial purchase price.
For example, an investor who bought 1 crore shares at Rs 1,250 each would have invested Rs 1,250 crore. Now, at the current IPO price of Rs 740, the value of those shares would drop to Rs 740 crore, resulting in a notional loss of Rs 510 crore.
The IPO pricing is also lower than the predictions made in the grey market, where shares are traded prior to their official listing.
HDB's public offering consists of a new issuance of Rs 2,500 crore and an offer-for-sale (OFS) of Rs 10,000 crore from its parent company, HDFC Bank.
As part of the OFS, HDFC Bank is offloading 13.51 crore shares.
Notably, HDFC Bank acquired its stake in HDB at an average cost of merely Rs 46.4 per share. Thus, even at Rs 740 per share, the bank is expected to reap a substantial profit of Rs 9,373 crore from this transaction, prior to taxes.
Looking ahead, at the higher end of the price range, the company is targeting a post-money valuation of around $7.2 billion, or approximately Rs 62,000 crore.
Point of View
Our focus remains on delivering unbiased insights. The HDB Financial IPO highlights the risks associated with early investments in high-stake financial offerings. While potential profits exist, the looming losses cannot be ignored, emphasizing the need for informed investment strategies.
NationPress
20/06/2025
Frequently Asked Questions
What is the expected IPO price range for HDB Financial?
The IPO price is expected to be between Rs 700 and Rs 740 per share.
How much could early investors lose?
Early investors may face notional losses of up to 48%.
What is the total value of the HDB Financial IPO?
The IPO is valued at Rs 12,500 crore.
What does the offer-for-sale (OFS) include?
The OFS includes Rs 10,000 crore worth of shares from HDFC Bank.
How many shares is HDFC Bank selling?
HDFC Bank is selling 13.51 crore shares in the OFS.
