HDFC is preparing for the initial public offering (IPO) of its non-banking financial company (NBFC) subsidiary, Financial.HDB

HDFC Bank, India's largest private lender, is gearing up for the long-awaited initial public offering (IPO) of its subsidiary, HDB Financial Services, according to sources cited in an Economic Times report. Holding a 94.7 percent stake in HDB Financial, HDFC Bank intends to divest a 10 percent share in the IPO, potentially generating an issue size ranging from ₹7,500 to ₹10,000 crore. This IPO could value HDB Financial Services at approximately $9 billion to $12 billion (₹75,000 crore to ₹1 lakh crore), subject to prevailing market conditions.

The IPO process involves HDFC Bank soliciting bids and valuation assessments from prominent investment banks. The bank aims to initiate the share sale for its non-banking financial services arm either in the last quarter of 2024 or the first quarter of 2025. Notably, this IPO could mark one of the significant listings in 2024 and the first from the merged HDFC Bank and HDFC entity.

HDB Financial's IPO holds significance as the company must adhere to Reserve Bank of India regulations, necessitating listing before September 2025. With 1,492 branches nationwide as of March 31, 2023, HDB Financial stands as one of the largest listed finance companies by market capitalization.

Despite the lack of response from HDFC Bank regarding queries, anticipation for HDB Financial's IPO remains high. Brokers foresee a robust listing, attributing it to the company's profitability track record and strong parentage. Market enthusiasm has already been reflected in the unlisted market, with HDB shares surging over 30 percent in the past three months, setting the stage for a successful debut.

HDB Financial primarily focuses on vehicle loans, loans against property, and personal loans, contributing to its revenue of ₹12,403 crore and profit after tax of ₹1,959 crore as of March 31, 2023. With preparations for the IPO underway, HDFC Bank is poised to navigate the process, aiming to unlock significant value through the public listing of its subsidiary.