HDB Financials Pre-IPO Shares: Key Insights
We had first invested in HDB Financials Pre-IPO Shares at around Rs. 225/share on Feb’2017 and since then here is how the price graph has moved:
Jan 2019 – Rs. 325/share
April 2020 – Rs. 650/share
November 2021 – Rs. 990/share
Aug 2022 – Rs. 635/share
This translate to a CAGR of roughly around 23.06%+
Now let’s have a look at company’s business model, Financials, Valuation, Latest News and FAQs.
About the Company: HDB Financial Services
Serving both retail and commercial clients, HDB Financial Services (HDBFS) is a prominent Non-Banking Financial Company (NBFC) that meets the expanding demands of an ambitious India. It is an NBFC, or systemically important non-banking financial company that does not accept deposits.
They are a well-established company with substantial capitalization that was incorporated in 2008. With an A1+ rating for its short-term debt and commercial papers and CARE AAA & CRISIL AAA ratings for its long-term debt and bank facilities, HDBFS is a reputable and robust financial organization.
Products of the Company:
There are currently three primary categories in the company’s product portfolio: loans, fee-based products, and business process outsourcing services.
1. Consumer Loans:
The Company provides White loans (Washing Machine and Refrigerator), Brown loans (such as televisions, audio equipment, and similar household appliances, etc.) and digital products (such as Mobile Phones, Computer and Laptops). The company also provides loans for household purposes.
Consumer Loans Portfolio includes:
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- Gold loan
- Consumer Durable loan
- Auto loans
- Personal loans.
- Loan against Mfs.
2. Asset Finance:
The business sells life and general insurance products from HDFC Life and HDFC Ergo as a registered corporate insurance agent.
3. Fee-based products:
The business sells life and general insurance products from HDFC Life and HDFC Ergo as a registered corporate insurance agent.
4. BPO Service:
Collection Service: The business and HDFC Bank have an agreement for the collection of debts owed by borrowers. The business has established 15 call centers with a combined seating capacity of 5000 throughout the nation.
5. Infrastructure:
HDB operates 1,319 branches throughout 959 Indian cities as of March 31, 2021. With centralized operations situated in Hyderabad, Chennai, and Noida, the company has data centers in Bengaluru and Mumbai. In a quest to strengthen its internal processes, the Company has further implemented a quality management system for its centralised operations.
6. Enterprise Loans:
Small and Medium Enterprise needs funding either for Working Capital, buying a new bid, or setting up a new plant. The company offers secured and unsecured loans to these SMEs.
Strengths of HDB Financials
1. HDFC Bank Holds Majority Shareholding :
The business supports the retail portfolio’s collection efforts and enhances the parent company’s product line and distribution system. Additionally, the company receives consistent financial assistance from its parent corporation, which has contributed a total of Rs 3,480 crore.
2. Established presence in the retail finance segment :
HDB Finance has developed into one of the leading players in the retail finance business over the past few years. At Rs 61,561 crore as of March 31, 2021, the total assets under management (AUM) had increased by about 5% year over year from Rs 58,833 crore the year before. On the other hand, fiscal 2021 disbursements dropped from Rs 29,853 crore to Rs 24,990 crore, a decline of more than sixteen percent from the previous fiscal year.
3. HDB Finance’s loan book has diversified over the years:
With increased presence in commercial vehicle/construction equipment (CV/CE) financing and business loans. As a result, the share of loans against property (LAP) declined to 29% as on March 31, 2021, as compared to 41% as on March 31, 2018. Whereas, that of CV/CE loans and Business loans rose to 43% and 24%, respectively, from 35% and 20%, respectively.
4. Healthy capital position :
As of March 31, 2021, the Tier-1 capital adequacy ratio (CAR) was 13.4%, and the overall CAR was 18.9%, indicating that capitalization is still strong. As of March 31, 2021, net worth was around Rs 8,446 crore, compared to Rs 8,018 crore on the same date in 2020, while gearing stood stable at ~6.0 times. Cushion for asset side risks was adequate, as reflected in net worth coverage for net non-performing assets (NPAs) at around 4.5 times as on March 31, 2021.
Weakness of HDB Financials
Capacity to sustain asset quality indicators in order to be observable in the current difficult environment: Although gross non-performing assets (NPAs) increased from 3.9% on March 31, 2020 to 4.5% on March 31, 2021 (pro-forma at 5.9% on December 31, 2020), overall asset quality is still sufficient.
The difficult macroenvironment was the primary cause of the rise in gross non-performing assets. As of March 31, 2021, the Gross Non-Performing Assets (NPA) from the Loans Against Property (LAP), CV/CE, and Business Loans segments were 5.6%, 4.6%, and 3.3%, respectively (4.6%, 4.8%, and 1.4%, respectively, a year ago).
Insights
- Loan disbursements during the year (2021-22) were ` 29,033 crore as against ` 24,990 crore in the previous year.
- The Assets under Management (AUM) of the Company as at March 31, 2022 stood at ` 61,444 crore as against ` 61,561 crore in the previous year.
- The Company has continued to focus on diversifying its products and expand its distribution while augmenting its digital infrastructure and offerings to effectively deliver credit solutions to its market.
- The total Revenue of the HDB Financials has increased from Rs.10,944.78 Cr. in the FY2020-21 to Rs.11,306.29 Cr. in the FY2021-22, which is a growth of around 3.3%.
- Profit after Tax(PAT) of HDB Financials has been increased by 158.35% from Rs.391.47 Cr. in the FY2020-21 to Rs.1011.40 Cr. in the FY2021-22.
Financials Of HDB Financials
Shareholding Pattern
Valuation
Currently, HDB Financials Pre-IPO Shares are available at Rs. 635 per share. And, book value of the HDB Financial is Rs. 120.69 per share. So, P/B is 5.2x.
The nearest peer in the listed segment is Bajaj Finance which is currently trading at P/B of 10.21x.
Latest News about HDB Financials Pre-IPO Shares
HDFC Bank to consider IPOs for HDFC Sec, HDB Financial Services after merger
RBI may allow NBFCs to issue credit cards: Report
FAQs about HDB Financials Pre-IPO Shares
How can I buy HDB Financials Pre-IPO Shares?
Purchase Pre IPO Shares by clicking on the link HDB Financials Pre-IPO Shares
What is HDB Financials Pre-IPO Shares?
As of August 2022, the market price of HDB Financials’ pre-IPO shares is 635 per share.
Is it possible to buy HDB Financials Pre-IPO Shares before listing?
Yes, Altius Investech, which deals in more than 130 pre-IPO shares, including HDB Financials services, is a good place to purchase HDB Financials pre-IPO shares.