HDB IPO Day 3: Issue subscribed over 1.5x; GMP at Rs 60

It’s not every day that HDFC Bank’s lending arm hits the primary market. So when HDB Financial launched its Rs 12,500 crore IPO, expectations were sky-high. Early signs looked good – Day 2 saw full subscription, with non-institutional investors leading the charge.

But here’s the twist: The grey market premium (GMP), which had touched Rs 75 before the issue opened, is now cooling off to Rs 60

What’s behind the GMP dip?

A falling GMP doesn’t mean the IPO is weak. It just means the initial euphoria is giving way to some cold-eyed number crunching.

A few reasons:

• The issue size is large, which tends to limit massive listing pops
• A meaningful chunk of the book is unsecured lending (around 27 per cent)
• Some investors feel the valuation already prices in a lot of growth

Still, with HDFC Bank as the promoter and a solid lending track record, long-term interest remains intact.

The numbers that matter

At the upper price band of Rs 740, HDB’s post-issue valuation comes in at Rs 61,400 crore. That gives it:

• A price-to-book (P/B) ratio of around 3.4 times
• A trailing P/E of nearly 28 times

About the company

HDB Financial is one of India’s largest non-bank lenders, offering everything from personal and business loans to gold loans and consumer durables finance. Backed by HDFC Bank, the company operates over 1,700 branches across India.

The bottom line

This IPO isn’t a moonshot, but it’s no dud either. HDB is a solid, well-run business riding the India consumption story. If you’re applying, do it with your eyes open. The GMP might not shoot the lights out, but there’s enough here to warrant a look.

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Disclaimer: This is not a stock recommendation. This story was created with the assistance of artificial intelligence and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.