ilmscore | HDB Financial Services IPO at Heavy Discount? | CA Rachana Ranade

HDB Financial Services IPO at Heavy Discount? | CA Rachana Ranade

Published: 2025-06-24
Status: Available | Analyzed

Predictions from this Video

Total: 5
Correct: 1
Incorrect: 0
Pending: 4
Unrated: 0
Prediction
Topic
Status
The RBI draft circular from October 4, 2024, if implemented as is, could force HDFC Bank (the promoter) to reduce its ownership in HDB Financial Services to below 20% due to overlapping businesses. This could negatively impact HDB's operations, finances, and share price.
"Our promoter may be required to significantly reduce its ownership in our company that is to less than 20% or such higher percentage with the prior RBI approval on account of over overlapping business with our promoter. So basically HDFC bank business and HDB financial services business is overlapping and one of the members of our promoter group if the draft circular issued by RBI on 4th October 2024 is implemented in its current form which may have a material adverse impact on our business operations, financial position and share price."
HDB Financial Services IPO - Promoter Ownership
Pending
HDB Financial Services' asset quality is deteriorating, with Gross NPA (GNPA) and Net NPA (NNPA) increasing from FY24 to FY25. Gross Stage 3 loans also saw an increase from 1.9% to 2.26% over the same period.
"asset quality G&PA and NPA both were rising. One more point is that gross stage three loans. Now again here also lower the better. What has happened from March 24 to March 25 it has increased from 1.9% to 2.26%. Again not good."
HDB Financial Services IPO - Asset Quality
Correct
Approximately 27% of HDB Financial Services' total gross loans are unsecured, which represents a risk factor.
"Unsecured loan comprise of 26.99% of total gross loans. Almost 27% of their loans are unsecured."
HDB Financial Services IPO - Unsecured Loan Portfolio
Pending
HDB Financial Services' Price-to-Book (PB) ratio of 3.72 is slightly higher than the industry average of 3.6. Additionally, its Price-to-Earnings (PE) ratio of 28.15 is higher than the industry average of 23.2.
"HDB financial services PB ratio is at 3.72 of course we have taken the upper band of the price band that they have mentioned And if I check the industry PB it is at 3.6. So as compared to industry average also it is higher for NBFC ideally I should check only PB but just for your reference PE is industry average is 23.2 and their P ratio is 28.15. So both higher as compared to industry average"
HDB Financial Services IPO - Valuation
Pending
Of the total HDB Financial Services IPO issue size of 12,500 crores, 2,500 crores is from a fresh issue intended to bolster the company's Tier 1 capital. The remaining 10,000 crores comes from an Offer for Sale (OFS) where HDFC Bank will sell its stake.
"2,500 crores fresh issue they are going to use for topping up their tier 1 capital. But what about the balance? Because total issue size is 12,500 crores. Out of which 2,500 crores is fresh issue. Bak is offer for sale. Big chunk is offer for sale only. So they're not going to get out of 12,500 crores. They're going to get only 2,500 crores. Balance 10,000 crores is going to go to the promoter who is going to sell the stage and it is HDFC bank."
HDB Financial Services IPO - Use of Proceeds
Pending