The initial public offering of India's HDB Financial has been priced based on the fundamentals of the business, unaffected by the roughly 70% premium the stock is trading at in the informal 'grey market' for unlisted securities, bankers said on Friday.

Shares in the lender will be sold in a price band of 700 rupees to 740 rupees per share ($8.06-$8.52), valuing HDB Financial at $7.1 billion at the upper end of the band. The shares were traded around 1,200 rupees to 1,250 rupees in the 'grey market'.

"This price has been determined basis extensive roadshows," said Jibi Jacob, head of equity capital markets at Jefferies India, one of the bankers to the issue.

"We have no influence on what is happening on the unlisted side," Jacob said at a press conference in Mumbai.

HDB Financial's IPO, the largest for an Indian non-banking financial company, opens for subscription on June 25, with large institutions bidding a day earlier.

The firm, which lends across segments such as personal and business loans, operates 1,747 branches nationwide. India's largest private lender, HDFC Bank, holds a 94% stake in the firm.

The IPO pricing has been determined on the fundamentals of the franchise and how key peers are trading, said Sonia DasGupta, head of the investment banking division at JM Financial, another banker to the issue.

At ₹740 per share, the price-to-book ratio, a key measure of valuation, works out to 3.72 for HDB, in line with peers such as Bajaj Finance and Shriram Finance .

India's red-hot IPO streak has cooled in 2025, following a blockbuster year in 2024 that saw record capital raised through new listings.

So far this year, nearly 100 firms have hit the market, raising about $4 billion, a decline from the 137 IPOs and $4.3 billion fundraise in the year-ago period, according to data compiled by LSEG.

Analysts attribute tepid retail investor demand to aggressive IPO pricing, as the Nifty 50 trades nearly 6% below its record high from last September.

The bull run in Indian markets post the COVID-19 crisis led to valuations of unlisted firms inflating beyond fundamentals, said Arun Kejriwal, founder of Kejriwal Research and Investment Services.

"HDB's approach is a timely reminder that IPO pricing should be grounded in reality, not speculative hype," Kejriwal said.

Published on June 20, 2025