Shares of HDB Financial,the NBFC arm of HDFC Bank,are baing valued at over Rs 80,000 crore in the grey market,making it the country’s fourth most valuable non-bank lender at the existing prices.
Brokers and market experts say HDB Financial Services is being traded heavily in the grey market at Rs.1,000-1,050 per share on hopes of an early initial public offering.
HDB,which gives personal and car loans,is likely to be listed in the current financial year. HDFC Bank which holds 95.53% stake in the company is planning to sell part of its stake through an initial public offer (IPO) to raise around Rs 10,000 crore,according to Bloomberg.
The top-end of the price values the firm at around Rs. 82,000 crore below Bajaj Finance’s Rs 2.11 Lakh crore and Bajaj Finserv’s Rs 1.34 lakh crore.HDB’s parentand the country’s biggest mortgage lender HDFC is the most valuable non-bank lender at Rs.3.78 lakh crore.
HDB’s price also values it just be low that of leading private sector lender Indusing Bank and higher than Bandhan Bank,Yes Bank and IDFC Bank.HDB is currently a subsidiary of HDFC bank,the country’s most valuable bank.
“Activity in the HDB Financial counter suddenly increased in the last few days ahead of its AGM on June 21,”said Narottam Dharawat,a Mumbai-based broker who deals in unlisted companies.”The company is currently trading at a huge premium because of the HDFC brand and the last trade was at Rs. 1,050 per share.
HDB’s price gives it a price to book value of 11.5 times compared with bajaj Finance’s 10.92 x and Bajaj Finserv’s 5.93x.
HDB Employees Welfare Trust and HDBF’S Employees welfare Trust hold 26.19 lakh shares and 19.22 lakh shares,respectively,as on March 31,2019.Debenture trustee company Vistra ITCL owns nearly 15 lakh shares in HDB Financial.”Several HNIs are buying HDB Financial stock on expectation that HDFC Bank will price the IPO in the range Rs 1,100-1,200,”said Anil Goel,a Delhi-based broker dealing with the unlisted shares.”Good demand for HDB shares is due to solid return investors got in companies like HDFC AMC and HDFC Life Insurance from the HDFC brand in the last few years.”
HDB’s profit more than tripled in the last four years from Rs.350 crore in FY15 TO rS 1,153 crore in FY19. Revenue grew 245% to Rs 8,725 crore.
HDB’s AUM growth moderated in FY19 to Rs.54,700 crore due to challenges in the NBFC sector.
Return on assets (RoA) has been around 2.3% in FY19,aided by the healthy net interest margin(NIM) and low credit cost while return on equity was at 17.2%.