HDB Financial Shares See Strong Action in Listing Week: Is It Still a Stock to Buy?

Mumbai | July 5, 2025 — Shares of HDB Financial Services Ltd, a subsidiary of HDFC Bank, witnessed significant investor interest during their much-anticipated listing week, marking a strong debut on the bourses. As secondary market volatility remains high and investors search for stable financial plays, the buzz surrounding HDB's listing has raised a pertinent question: Is HDB Financial still worth buying after its stellar start?

Strong Debut Reflects Market Confidence

HDB Financial’s listing on the NSE and BSE was met with substantial demand from institutional and retail investors alike. The stock opened at ₹865 per share, nearly 12% above its demerged price, and saw high intraday volumes, with prices touching an early-week high of ₹902 before closing slightly lower at ₹880 by the end of the week.

Analysts attribute the positive momentum to the parentage of HDFC Bank, the company’s steady financial performance, and its position in India’s growing non-banking financial company (NBFC) sector.

“HDB’s business fundamentals and its risk-managed approach to retail lending have been key drivers of investor optimism,” said Ravi Menon, Head of Research at Axis Securities. “The listing was long overdue, and the strong start shows the market had priced in its fundamentals well.”

Business Model and Growth Drivers

HDB Financial Services is a leading NBFC focused on retail and SME lending, with a well-diversified loan book comprising personal loans, gold loans, commercial vehicle financing, and business loans. As of FY25, the company reported an AUM (Assets Under Management) of over ₹80,000 crore, with gross NPA at just 2.1%, significantly below the industry average.

The company has also been expanding its digital footprint, focusing on technology-led origination and servicing to reduce operational costs and reach underpenetrated segments.

“In the current macro environment, NBFCs with robust underwriting practices and strong parentage are poised to outperform,” said Vandana Shah, Senior VP at Geojit Financial Services. “HDB ticks both boxes and could see sustainable growth.”

How Does It Compare to Peers?

The NBFC space has seen a revival over the past year, with rising credit demand from Tier II and III cities. While Bajaj Finance, Cholamandalam Investment, and Muthoot Finance continue to dominate the market, HDB’s entry offers an interesting mix of conservative risk management with aggressive digital expansion.

In terms of valuation, post-listing HDB trades at a Price-to-Book (P/B) ratio of 3.5x, slightly higher than Cholamandalam’s 3.1x but lower than Bajaj Finance’s lofty 6.2x.

Concerns and Risks Ahead

Despite the optimism, analysts caution against assuming uninterrupted upside. The NBFC sector remains vulnerable to:

• Interest rate volatility

• RBI regulatory tightening

• Rising competition in unsecured lending

Also, a large portion of HDB's AUM is still skewed toward consumer durable loans and gold-backed lending, which can be sensitive to rural income fluctuations and gold prices.

“While HDB is strong fundamentally, any adverse turn in macroeconomic conditions or a spike in delinquencies could pressure margins,” warned Anirudh Basu, Banking Analyst at Kotak Institutional Equities.

What Should Investors Do?

For those who missed the listing rally, the key question is whether there’s still room for upside.

Experts believe that long-term investors looking for exposure to high-quality NBFCs with a proven track record and parentage can still consider HDB, especially on dips.

“The stock isn’t cheap, but it’s not overpriced either, considering the quality of its book,” said Neha Kothari, Portfolio Manager at Anand Rathi Wealth. “Investors should stagger their entry, preferably around ₹850–₹860 levels.”

Short-term traders may face volatility, especially as early investors book profits. However, for patient investors, HDB offers a solid bet on India’s retail credit expansion.

Investor Outlook: Cautious Optimism

With financial inclusion set to deepen further and India’s consumption story intact, the NBFC space remains a fertile ground for long-term wealth creation. HDB Financial, backed by the country’s most trusted banking brand, is well-positioned to capitalize on this trend.

Still, with valuations already factoring in a good portion of expected growth, new investors should temper expectations and focus on long-term fundamentals rather than chasing near-term price spikes.

HDB Financial’s strong listing performance confirms investor faith in the NBFC’s growth story and its alignment with parent HDFC Bank’s strategic vision. While the immediate rally may cool off, the stock remains a quality pick for long-term portfolios, provided one enters with a realistic return expectation and keeps an eye on macroeconomic indicators.