HDB Financial Services slips over 2%, trading at IPO price; here’s why

Shares of HDB Financial Services fell by more than 2% on Monday, hitting a new low of ₹739.10 as the lock-in period of three months for shareholders has come to an end this month. The shares were trading slightly below the IPO offer price of ₹740.

As per reports, Nuvama Alternative & Quantitative Research stated that as many as 2.28 crore shares of HDB Financial Services would free up for trade on Monday, which amounts to 3% of its outstanding equity. Based on Friday's closing price, the number of shares that will free up for trade, amount to ₹1,723 crore.

The non-bank lending arm of HDFC Bank was one of the largest IPOs of the year, and was listed on July 2 at ₹835 per share, which was a 12.84% premium, and made a new post-listing high of ₹891.9 the next day. 

The IPO of HDB Financial was a combination of fresh issue of 3.38 crore shares worth ₹2,500 crore and offer for sale (OFS) of 13.51 crore shares aggregating to ₹10,000 crore by the promoter entity HDFC Bank, which now holds over 94% stake.

The anchor book saw participation from a total of 141 institutional investors, including some marquee names such as BlackRock, Government Pension Fund Global, Goldman Sachs, Fidelity Investments, Abu Dhabi Investment Authority, HSBC, and others. 

HDB Financial Services reported Q1 results for the current financial year with a rise in revenue, but a decline in profit, causing its share price to decline 4% post-announcement in July.

The company reported a 2.4% fall in the net profit to ₹567.7 crore on a year-on-year (YoY) basis. It also recorded an 18.3% YoY rise in its net interest income, but provisions also went up by over 60% which affected its net profit.