Mumbai: HDB Financial Services, the unlisted non-banking subsidiary of HDFC Bank, has seen its value zoom to Rs 90,000 crore, thanks to the frenzied deals in its shares in the unofficial market. In the wake of the strong listing of HDFC Asset Management Co early in August, investors are making a beeline for HDB, driving the shares up by 40 per cent in the last one month.
Brokers doing deals in the unlisted space said affluent investors are buying HDB shares at Rs 1,150 a share compared to Rs 850 a piece in July. Value pickers, who lapped up these shares late in 2016, have already made a killing. Two years ago, the stock was trading at Rs 175-200 a piece.
At Rs 1150 per piece, the stock is trading at a price to book value of 14.5 times. Most of its listed NBFC peers are trading at 5-10 times their price to book value.
The frenzied appetite for HDB shares is on the hopes that the company would come up with an IPO in the next 12 months. HDB Financial sells consumer loans, enterprise loans and asset finance.
A spokesperson for HDFC Bank did not reply to an email seeking comment.
Hopes are high from HDB given that investors have made strong listing gains in HDFC Asset Management and HDFC Standard Life in November.
“Investors have made money in both the IPOs of HDFC Standard Life Insurance and HDFC Asset Management in the last one year. HDFC is a brand that they trust and they strongly believe this will be the next company from the group to come up with an IPO,” said Sandip Ginodia, CEO, Abhishek Securities, a firm which deals in unlisted securities.
HDFC Standard Life, which listed at a 19 per cent premium to its IPO price of Rs 290 in November, is currently trading at Rs 467, 61 per cent above its issue price. HDFC Asset Management Co, which offered its shares at Rs 1,100, now trades at Rs 1,834, giving a 67 per cent return to its investors.
Ginodia said demand for these shares are from the rich investors, who have been willing to pay a premium for these shares. Most of the sellers have been HDB employees who got stock options.
“This company has done well consistently over the last few years. I have keep on getting calls from investors wanting to buy the stock but I am holding on because I have faith in the management and the current CEO. He has kept the top management together and ensured that the company has maintained its asset quality,” said a shareholder who has held on to his shares since receiving it in employee stock options.
Currently 95.87 per cent of the shares have been held by promoter HDFC Bank, according to the HDB annual report, though it is down from 96.20 per cent last year as the company issued some more ESOPs during the year.
The companys net profit increased 36 per cent to Rs 952 crore in the fiscal year ended March 2018 from Rs 699 crore a year earlier riding on a 24 per cent jump in revenues to Rs 7,062 crore from Rs 5,715 crore a year earlier. Total loan book has increased to Rs 34,981 crore from Rs 25,287 crore a year ago.
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