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HDB Financial Services (HDBFS) is a leading non-banking financial company (NBFC) that caters to the growing needs of an Aspirational India, serving both Retail & Commercial Clients. Hdb finance is a subsidiary company of HDFC Bank. HDB Finance Services shares are in demand due to upcoming IPO. The current product portfolio consists of three main categories i.e. Loans, Fee-based products, and BPO services.
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History & profile:
HDB Finance Services Ltd was incorporated in 2007 by HDFC Bank. HDBFS is engaged in the business of financing, collection, and insurance services. HDBFS also carries a Business Process Outsourcing (BPO) business and provides back-office processing services. The company is also engaged in the business of marketing and promotion of the various financial products. It distributes general and life insurance products for HDFC Ergo General Insurance Company and HDFC Standard Life Insurance Company.
HDBFS is a wholly owned subsidiary of HDFC Bank which holds 95.87% of equity shares. The product portfolio of the company consists of loans (secured and unsecured), asset finance (commercial vehicle, construction equipment & tractor loans), sales finance, fee-based products (insurance services) and BPO services. The company has 1151 branches in 815 cities in India and has its data centre at Bengaluru and centralised operations in Hyderabad and Chennai.
HDBFS is ranked 6th among top Non-Banking Financial Company (NBFC) in India. The company has been reporting strong financial performance. Its revenue and net profit has grown at about a scorching pace of 40% CAGR over the past three years.
HDB enjoys high ratings among NBFC companies. CARE Ratings Limited (CARE) and CRISIL Limited (CRISIL) have assigned CARE AAA / Stable and CRISIL AAA / Stable. ratings to the various facilities availed by the company.
The Housing Development Finance Corporation (HDFC) was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI’s liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.
Lending
HDBFS offer a wide range of secured and unsecured loans to customers. It provides a one-stop-shop for all requirements, be it loans, investments or protection. It has quickly grown to have more than 1000 Branches spread across 22 States & 3 Union Territories.
BPO Services
BPO services division delivers back office services such as forms processing, documents verification, finance and accounting services and correspondence management. It also delivers front office services such as Contact center management, Outbound marketing and collection services.
Parent Company
HDB Financial Services Limited is a subsidiary company of HDFC Bank. The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI’s liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of ‘HDFC Bank Limited’, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995.
| Top management | |
|---|---|
| Name | Designation |
| Mr. Aditya Puri |
Chairman |
| Mr. Ramesh G |
Managing Director & CEO |
| Mr. Bhavesh Zaveri |
Non-Executive Director |
| Mr. Jimmy Tata |
Non-Executive Director |
| Ms. Smita Affinwalla |
Independent Director |
| Mr. Venkatraman Srinivasan |
Independent Director |
Financials (Rs crore)
| Year Ended March | FY19 | FY18 | FY17 |
|---|---|---|---|
| Net Revenue | 8724.8 | 5714.5 | 3302 |
| Profit After Tax | 1153.2 | 698.8 | 534.4 |
Key Ratios
| Year Ended March | FY19 | FY18 | FY17 |
|---|---|---|---|
| Capital Adequacy Ratio | 17.91% | 17.94% | 20.79% |
| Net NPA | 1.26% | 1.58% | 0.84% |
| AUM | 55425 | 44469 | 34277 |
| EPS | 14.71 | 11.94 | 9.6 |
HDBFS posted net profit of Rs 1153 crore for the year ended 31 March 2019. Profits were up 23.57 % for the year. The company has emerged as one of the larger players in the retail financing space over the past few years; Overall AUM has grown to Rs 55425 crore as on 31 March 2019.
Investment rationale
HDB Financial Services has loan book of around Rs 55,000 crores spread across three major segments namely consumer loans, enterprise loans and asset finance. The company focuses mainly on asset financing, which includes commercial vehicle, commercial equipment and tractor loans.
Similarly, the company is further expanding into consumer durable financing, digital product loans, consumer durable financing and related segments.Though the company has traditionally focused on the self-employed segment in non-metros, it has now widened its reach to metro regions.
The loans-against-property segment was the second-highest contributor to HDBFS’s total loan book. Unsecured business loans and other secured loans make up the rest of the book. Hence, the overall quality of the loan book remains strong.
HDB Share Price is likely to trend higher as it benefits from HDFC’s nationwide presence, network, brand recognition, and has the advantage of leveraging the expertise of the bank’s senior management who are represented on the board of the company. NBFC is one of the fastest growing sectors in India. HDB Finance Services Share Price will command premium valuations compared to its peers due to its ability to manage asset quality. Currently, HDB Financial Services Share Price is near Rs 1,125 per equity share.
With upcoming IPO in pipeline, HDB Financial Share Price is expected to remain firm due to strong brand name, quality management, robust business model and steady growth rate.
Latest news and developments
- HDB Fin Services now valued at Rs 90,000 crore in unlisted market : Economic Times 12-12-2019
Aditya Puri-chaired HDB Financial Services is trading at a valuation of Rs 90,000 crore in the secondary market for unlisted shares.
- HDB Financial Services partners with Ashok Leyland: Times of India 03-12-2019
HDB Financial Services Limited has signed a memorandum of understanding (MoU) with commercial vehicle manufacturer Ashok Leyland to enter into a strategic financing partnership for two years. This MoU will enable both HDB and Ashok Leyland to offer customised financial solution to customers across India, including semi-urban and rural areas, wherever Ashok Leyland and HDB Financial Services have presence.
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Cheer up! This NBFC IPO from HDFC Group to spark investor interest: Business Today 4 July 2019
If one takes Bajaj Finance as a proxy, the most optimistic valuation of HDB Financial could be close to Rs 80,000 crore. Initial public offerings (IPOs) from all large and well-respected groups spark investor interest not only for quick listing gains but also for long-term value investment. Deepak Parekh-managed HDFC Group is one such group in the financial services space that has rendered mega returns with complete safety of investments.
In fact, the group’s listed companies in insurance, banking, mutual fund and housing finance spaces have always shown best corporate governance practices, attracting institutional interest, especially from foreign investors. Currently, HDFC, HDFC Bank, HDFC Life and HDFC AMC are four listed group companies with a combined market capitalisation of Rs 12 lakh crore.
- HDB Financial: Is HDFC Bank’s ‘Mini-Me’ On The Fast Track To Growth? 29 May 2019
Looking at pre-listing trades in the grey market, investors are valuing the company at closer to $11.2 billion, Bernstein analysts said.
Read our media coverage on HDB Financial
HDB Fin gets Rs 80,000 crore valuation in grey market: Economic Times dated 28 June 2019
HDB the new billion dollar baby? Economic Times dated 26 July 2017
https://economictimes.indiatimes.com/markets/stocks/news/hdb-the-new-billion-dollar-baby/articleshow/59778050.cms