About HDB Financial Services Limited

Established in 2007, HDB Financial Services Limited is a retail-centric non-banking financial company (NBFC). It offers a variety of lending solutions across Enterprise Lending, Asset Finance, and Consumer Finance. The company also provides business process outsourcing (BPO) services to its promoter, including back-office operations, collections, and sales support. Additionally, it offers fee-based services such as insurance distribution to its lending customers. Operating on a "phygital" model that blends physical branches with digital channels like tele-calling and partner networks, HDB had 1,772 branches in 1,162 towns across 31 states and union territories as of September 30, 2024. It is supported by over 80 brand partnerships and more than 1.4 lakh dealer touchpoints.

HDB Financial Services Limited IPO Overview

Established in 2007, HDB Financial Services Limited is a retail-centric non-banking financial company (NBFC). It offers a variety of lending solutions across Enterprise Lending, Asset Finance, and Consumer Finance. The company also provides business process outsourcing (BPO) services to its promoter, including back-office operations, collections, and sales support. Additionally, it offers fee-based services such as insurance distribution to its lending customers. Operating on a "phygital" model that blends physical branches with digital channels like tele-calling and partner networks, HDB had 1,772 branches in 1,162 towns across 31 states and union territories as of September 30, 2024. It is supported by over 80 brand partnerships and more than 1.4 lakh dealer touchpoints.

Financial Status of HDB Financial Services Limited 

HDB Financial Services Limited IPO Strengths

Comprehensive Lending Portfolio Across Three Core Segments

HDB operates through a well-integrated omni-channel distribution model, delivering a broad suite of loan products across three primary business verticals:

• Enterprise Lending (39.85%): Provides secured and unsecured financing solutions tailored to MSMEs, supporting a wide array of business needs.
• Asset Finance (37.36%): Offers secured loans for income-generating assets such as commercial vehicles, tractors, and construction equipment.
• Consumer Finance (22.79%): Covers consumer durables, personal loans, two-wheeler loans, and digital product financing, targeting retail borrowers.

Strong Financial Performance and Profitability Metrics

• Total Gross Loans stood at ₹986.2 billion as of September 30, 2024, marking a CAGR of 20.93% since March 2022.
• Assets Under Management (AUM) reached ₹902.3 billion by March 31, 2024, growing at a CAGR of 21.18% over two years.
• Profit After Tax (PAT) for FY24 was ₹24.6 billion, with a robust CAGR of 55.98% since FY22.
• Delivered a strong Return on Assets (ROA) of 3.03% and Return on Equity (ROE) of 19.55%, ranking among the highest in its peer group.

Customer-First Strategy with Focus on Underserved Segments

Established in 2007 as a wholly owned subsidiary of HDFC Bank, HDB serves 17.5 million customers, primarily from low and middle-income groups, including a large base of first-time borrowers. Its granular loan portfolio ensures minimal concentration risk, with the top 20 customers comprising less than 0.36% of the total loan book.

Widespread Branch Network and Advanced Digital Integration

HDB has built a strong national presence with 1,772 branches across 31 states and union territories, with over 80% of its branches located outside major metropolitan areas. Its hybrid “phygital” model blends physical presence with digital tools, enabling seamless delivery and service. Key components include:

• 140,000+ dealer and retailer touchpoints
• Partnerships with 80+ brands and OEMs
• Digitally-assisted sales and collections processes
• Over 95% of customers onboarded digitally

Prudent Risk Management and Healthy Asset Quality

As of September 2024, HDB reported:

• Gross NPA (GNPA): 2.10%
• Net NPA (NNPA): 0.83%
• Provisioning Coverage Ratio (PCR): 66.82%

These metrics reflect its conservative underwriting standards and effective risk management practices.

The company maintains a AAA credit rating from CRISIL and CARE, ensuring access to low-cost funding, with a borrowing cost of 7.53%. It also maintains a Capital to Risk-Weighted Assets Ratio (CRAR) of 19.30% and a debt-to-equity ratio of 5.93x, reflecting financial stability and resilience.

Industry Outlook

India’s Non-Banking Financial Companies (NBFCs) and housing finance market are entering a phase of strong, sustained growth, backed by favourable macroeconomic conditions and sector-specific enablers.

NBFC Sector Snapshot

• Credit Expansion and Market Share: NBFC credit grew at a 12% CAGR between FY2019 and FY2024, and is projected to grow at 15–17% annually through FY2024–2027. By FY2027, NBFCs are expected to command ~21% of total system credit, up from the current ~19%.
• Boom in Retail Lending: Retail loans—including housing, auto, and personal credit—now make up 58% of NBFC portfolios. This segment surged by 23% in FY2023–24, and is anticipated to maintain a 16–18% CAGR through FY2026.
• Key Growth Drivers: Momentum in the sector is driven by a rising middle class, greater financial inclusion, and regulatory reforms that help reduce credit risk. Additionally, RBI’s interest rate cuts enhance margins, as NBFCs typically face a delay in loan repricing—benefiting their profitability in the near term.
• Emerging Challenges: Shifts in the funding mix and increasing cost of capital are placing pressure on margins. Furthermore, a higher share of unsecured loans could raise credit costs, requiring careful monitoring and risk control.

Housing Finance Sector: Positive Long-Term Trajectory

• Market Size and Growth Potential:The Indian housing loan market was valued at USD 329.9 billion in 2024, and is expected to reach USD 561.5 billion by 2030, reflecting a CAGR of 9–13%.
• Core Growth Enablers: Rising urbanisation, targeted government schemes such as PMAY (Pradhan Mantri Awas Yojana) and CLSS (Credit Linked Subsidy Scheme), increasing disposable income, and favourable interest rates are driving demand for housing loans across urban and semi-urban India.
• Industry Forecasts: According to CareEdge, the housing finance industry is projected to grow at a 15–16% CAGR from FY2025 to FY2030, with total market size expanding from ₹33 trillion to ₹77–81 trillion. Housing Finance Companies (HFCs) are expected to retain a 19–20% share of this growing market.

Looking Forward: Opportunities and Risks

• Favourable Trends: As India’s economy accelerates, the financial services ecosystem is benefitting from digital innovation, deeper market penetration by NBFCs, and supportive policy frameworks. Together, these factors position NBFCs and HFCs to play a dominant role in retail credit and housing finance going forward.
• Key Risk Factors: Despite the positive outlook, the industry must navigate rising funding costs, tightening regulations, and potential asset quality pressures. A strong focus on underwriting discipline and risk management will be essential to maintain resilience in the evolving financial landscape.

How Will HDB Financial Services Limited Benefit

• Accelerating digital adoption enhances HDB’s efficiency in tech-enabled onboarding, collections, and customer servicing.
• Access to AAA-rated funding allows HDB to borrow at lower costs even as industry-wide capital costs rise.
• Expansion in housing finance opens up avenues for affordable housing-linked personal and consumer loans.
• Government housing schemes like PMAY indirectly spur demand for loans on vehicles and consumer durables in smaller towns.
• Growing retail credit appetite supports HDB’s balanced mix across enterprise, asset-backed, and consumer lending segments.
• HDB’s steady 20%+ loan CAGR positions it to benefit from the NBFC sector’s expected 15–17% growth through FY27.
• Healthy asset quality, with robust GNPA and NNPA ratios and a solid provisioning buffer, helps reduce credit risk.
• RBI’s interest rate cuts, combined with slower repricing of loans, help protect and improve HDB’s lending margins.
• Strong demand in rural and underbanked areas aligns with HDB’s wide presence—80% of branches are in non-metro regions.
• The industry-wide pivot toward granular, secured lending aligns well with HDB’s focus on first-time borrowers and asset-backed credit.

Peer Group Comparison

Key Strategies for 

HDB Financial Services Limited

Expanding and Diversifying Customer Base through Product Innovation

HDB Financial Services Limited is steadily growing its customer segments by offering a diverse portfolio of customised lending solutions. The company enhances its current offerings while introducing innovations—such as automated underwriting for two-wheeler loans—to widen its reach and boost cross-selling across various business lines.

Leveraging Technology, Data Analytics, and AI for Operational Excellence

Technology is a key growth driver for HDB Financial Services. The company employs AI, advanced data analytics, and automation to improve customer service, enhance employee efficiency, and lower operational costs. Continued investment in these areas ensures stronger underwriting, efficient collections, and resilience against emerging digital risks.

Strengthening a Nationwide Omni-Channel Distribution Network

With a strong presence of over 1,772 branches across 1,162 towns and a well-established digital platform, HDB Financial Services is committed to expanding its distribution footprint. It continues to enhance accessibility by deepening relationships with OEMs, dealers, and partners across all customer touchpoints.

Strengthening Risk, Underwriting, and Collections Frameworks

The company is focused on minimising credit risk through continuous improvements in its risk management systems. Drawing on extensive experience and customer insight, HDB reinforces its underwriting and collection capabilities with targeted employee training, advanced technology, and quicker decision-making to uphold superior credit standards.

Reducing Borrowing Costs through Diversified Funding Sources

To optimise its cost of capital, HDB Financial Services is diversifying its funding base. By increasing reliance on ECBs and tapping into varied sources like banks, mutual funds, and bond markets, the company enhances financial stability while maintaining cost-effective leverage.

FAQs

How can I apply for HDB Financial Services Limited IPO?

You can apply via Hdfc securities invest right app , or other brokers using UPI-based ASBA (Application Supported by Blocked Amount).

What is the total issue size of the HDB Financial Services IPO?

The IPO size is ₹12,500 crore, including ₹2,500 crore fresh issue and ₹10,000 crore offer for sale.

When will the HDB Financial Services IPO open for subscription?

The HDB Financial IPO is set to open on 25 June 2025, and is scheduled to close on 27 June 2025

On which stock exchanges will HDB Financial Services be listed?

The shares will be listed on both the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).

Who is the promoter of HDB Financial Services Limited?

HDFC Bank Limited is the promoter and holds a 94.36% stake pre-IPO.

What is the face value of shares in this IPO?

Each share in the IPO carries a face value of ₹10.