HDB Financial IPO leaves early investors facing big losses

IANS June 21, 2025 372 views

The HDB Financial IPO is causing distress for early investors, with share prices dropping nearly 50% from private transaction levels. HDFC Bank, however, stands to make massive profits from the sale of its stake. The IPO pricing has fallen short of grey market expectations, leaving thousands of shareholders facing steep losses. This valuation gap highlights the risks of pre-IPO investments in volatile markets.

"Investors who bought shares at Rs 1,250 face a notional loss of Rs 510 crore" – Red Herring Prospectus
New Delhi, June 20: The upcoming IPO of HDB Financial Services, worth Rs 12,500 crore, is turning out to be a worrying event for many early investors.

Key Points

1

Early investors may lose up to 48% as IPO prices drop below private rates

2

HDFC Bank set to profit Rs 9,373 crore from stake sale

3

Grey market expectations undercut by official IPO pricing

4

49,553 shareholders impacted by valuation gap

According to the latest Red Herring Prospectus (RHP) filed on June 19, over 49,000 individual shareholders may suffer notional losses of up to 48 per cent.

As of June 19, the company had 49,553 individual shareholders.

These investors had bought HDB shares in earlier private transactions at prices ranging from Rs 1,200 to Rs 1,350 per share.

But now, with the IPO priced at Rs 700 to Rs 740 per share, these shareholders are seeing the value of their investments drop sharply -- by 38 to 48 per cent, depending on the price at which they originally bought the shares.

For instance, an investor who purchased 1 crore shares at Rs 1,250 each would have invested Rs 1,250 crore. At the current IPO price of Rs 740, the value of those shares would fall to Rs 740 crore, leading to a notional loss of Rs 510 crore.

The IPO pricing is also lower than what was suggested by the grey market -- an unofficial market where shares are traded before they are listed on stock exchanges.

HDB’s public issue includes a fresh issue of Rs 2,500 crore and an offer-for-sale (OFS) worth Rs 10,000 crore by its parent company, HDFC Bank.

As part of the OFS, HDFC Bank is selling 13.51 crore shares.

Interestingly, HDFC Bank had acquired its stake in HDB at an average cost of just Rs 46.4 per share. So, even at Rs 740 per share, the bank is likely to make a massive profit of Rs 9,373 crore from this sale, before taxes.

Meanwhile, at the upper end of the price band, the company is aiming for a post-money valuation of approximately $7.2 billion, or around Rs 62,000 crore.

Reader Comments

R
Rajesh K.
This is why retail investors should be careful about pre-IPO investments. Big institutions like HDFC Bank get shares at Rs 46 while common people pay Rs 1200+! The system is rigged against small investors. SEBI should investigate such huge valuation gaps.
P
Priya M.
Feeling bad for those 49,000 investors 😔 Many might have invested their hard-earned savings. The company should offer some compensation or bonus shares to early supporters. This kind of treatment discourages people from investing in Indian startups.
A
Amit S.
Typical case of "buyer beware" in markets. The grey market premium was just speculation. Investors should have done proper valuation analysis before buying at those crazy prices. HDFC Bank is just being smart - they're in business to make profits after all.
S
Sunita R.
As someone who works in finance, I think the IPO price reflects true valuation. The earlier Rs 1200+ prices were inflated by hype. Maybe this will teach investors to be more rational rather than following the herd mentality. Still painful for those stuck though.
V
Vikram J.
HDFC Bank making 9000+ crore profit while retail investors lose half their money? Doesn't seem fair yaar. There should be better regulations for pre-IPO markets. Small investors are always the ones who get burned in these situations.
N
Neha P.
This is why I only invest in mutual funds through SIP. Direct equity investing is too risky for common people like us. Let the experts handle it! 👍 The stock market isn't a get-rich-quick scheme as many believe.

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HDB Financial IPO HDFC Bank investor losses stock market IPO pricing