Investors in HDB Financial Services Ltd are surprised after the non-banking financial company (NBFC) announced a price band of ₹700–₹740 per share for its initial public offering (IPO), which is nearly 40% lower than its current valuation in the unlisted (grey) market. At the upper end of the price band, the company’s market capitalization would be approximately ₹68,900 crore.
Currently, shares of HDB Financial are trading at around ₹1,250 in the unlisted (grey) market, reflecting a 15% drop from their peak of ₹1,455 recorded in September 2024. Despite this recent correction, the stock has still delivered a strong gain of over 115% in the unlisted space between January and September 2024.
Interestingly, HDB Financial isn’t the only company to price its IPO significantly lower than grey market expectations. In the past, companies like Tata Technologies, AGS Transact, UTI Asset Management Company Ltd, and PB Fintech have also priced their IPOs below their prevailing unlisted market valuations.
Market experts caution investors against jumping into the unlisted space purely based on IPO hype without proper due diligence. The unlisted market is inherently volatile and carries higher risk, requiring a long-term, patient investment approach for meaningful wealth creation.
Analysts—speaking on condition of anonymity—suggest that upcoming IPOs of Tata Capital and the National Stock Exchange (NSE) may follow a similar pricing strategy, with offer prices expected to be lower than their current unlisted valuations. According to them, the unlisted space is best suited for early-stage investments—typically two to three years before an IPO—when valuations are more reasonable. If there's no pricing advantage relative to the expected IPO price, the overall value proposition diminishes considerably.