Emkay Bullish on HDB Financial ahead of listing; GMP hints at strong market debut

HDB Financial Services, the NBFC arm of HDFC Bank, is set to list on the BSE and NSE today, amid early signs of strong investor demand. The IPO, priced at ₹740 per share, was quoting a grey market premium (GMP) of ₹65 ahead of its debut, indicating a likely listing around ₹805, translating to a premium of approximately 8.8% over the issue price.

Ahead of the listing, Emkay Global has initiated coverage on HDB Financial Services shares with a ‘Buy’ call, citing its highly diversified (geographically and product-wise) business and large-scale lending franchise. The brokerage has recommended a share price target of ₹900 apiece, indicating a potential 22% upside over the IPO price of ₹740 per share.

“With a favorable interest rate cycle amid frontloaded repo rate cuts driving NIM expansion, credit cost moderation, and the growth outlook improving, HDBFS is well positioned to improve profits/growth, to achieve 2.7%/17% RoA/RoE, respectively, by Mar-28, and deliver ~20%/27% AUM/EPS CAGR over FY25-28E,” Emkay said in a report.

Today, HDB Financial Services serves over 19 million customers through 1,770 branches across 31 states and union territories, with assets under management (AUM) exceeding ₹1.1 lakh crore. This growth has been achieved through a disciplined approach to profitable expansion, navigating headwinds such as demonetisation, GST rollout, and the COVID-19 pandemic — all of which disproportionately affected its borrower base, the report noted.