Mumbai, June 26 HDB Financial Services’ initial public offering (IPO), once seen as a golden opportunity by early backers, has turned into a disappointment for pre-IPO investors.
The Rs 12,500 crore public issue has been priced in the range of Rs 700 to Rs 740 per share -- significantly lower than expectations and recent grey market levels.
According to reports, the company’s unlisted shares were trading at around Rs 1,225 just days before the IPO announcement.
Many investors who entered earlier at even higher prices -- up to Rs 1,550 -- are now staring at notional losses of up to 52 per cent, even before the stock hits the exchanges.
According to the latest Red Herring Prospectus (RHP) filed on June 19, there are 49,553 individual shareholders who had purchased HDB shares in private deals at prices between Rs 1,200 and Rs 1,350.
With the IPO now priced far below that range, investors are watching their potential returns evaporate.
Take this example: If an investor had purchased 1 crore shares at Rs 1,250 each, they would have spent Rs 1,250 crore.
At the IPO price of Rs 740, the value of those shares would drop to Rs 740 crore -- a notional loss of Rs 510 crore.
This isn’t the first time such a thing has happened. In 2023, Swiggy’s shares were changing hands in the unlisted market at over Rs 500 ahead of its IPO launch.
However, after listing, the enthusiasm waned, and the stock is currently trading around Rs 400.
But when its IPO launched in November, the excitement faded quickly. Today, Swiggy shares are trading near Rs 400.
HDB’s IPO includes a fresh issue of Rs 2,500 crore and an offer-for-sale (OFS) of Rs 10,000 crore by its parent company, HDFC Bank.
The bank is offloading 13.51 crore shares, and since it had acquired them at an average cost of just Rs 46.4, it is expected to make a hefty pre-tax profit of over Rs 9,300 crore.
However, HDB is aiming for a post-money valuation of around Rs 62,000 crore, or roughly $7.2 billion, at the upper end of the IPO price band.
Meanwhile, on the second day of HDB Financial Services' Rs 12,500 crore IPO, the non-institutional investors (NII) segment was fully subscribed. Overall, the issue has been subscribed 67 per cent so far, while the retail investors' portion has seen a subscription of nearly 49 per cent.
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