HDB Financial Shares Back at IPO Price as Lock-in Ends Monday: What Investors Should Watch

Main Pointers
1) Unlocking of 2.28 crore shares (~3% of outstanding equity) becomes tradable from Monday.
2) The stock has retraced to around its IPO price of ₹740, with Friday close near ₹755; additional supply could inject volatility.
3) June quarter results show NII up 18.3% YoY, but provisions rose over 60%, tempering profit growth; September-quarter updates will be watched.

HDB Financial Services Ltd., the non-bank lending arm of HDFC Bank, is set to be in the focus on Monday as its three-month shareholder lock-in period comes to an end. The unlock affects the shares of one of the year’s largest IPOs, with about 2.28 crore shares freed up, according to Nuvama Alternative & Quantitative Research. That equates to roughly 3% of the company’s outstanding equity and creates the potential for trading activity from Monday. It is important to note that the end of the lock-in does not obligate holders to sell; it merely makes the shares eligible to trade.

With the Friday close used as a reference, the unlocked block could be worth about ₹1,723 crore in tradable value on Monday, depending on market movements. HDB Financial, the listed arm of HDFC Bank, began trading on July 2 and had initially touched a post-listing high of ₹891.9. Since then, the price trend has been softer, and the stock was around its IPO price of ₹740 as of close, albeit at ₹755.85 on Friday. The move back toward the offer price underscores a risk-reward dynamic for investors, especially as Monday’s session could bring fresh supply into the market.

On the earnings front, HDB Financial posted an 18.3% year-on-year rise in net interest income (NII) for the June quarter. However, provisions rose by more than 60%, which weighed on the bottom line and kept year-on-year profit growth tentative. This mix of stronger operating income and higher provisioning is likely to color investor sentiment as the company approaches its September-quarter update.

Market watchers will also scrutinize the company’s shareholding pattern at the end of September and any business update for July-September, should management issue one. Overall, Monday’s trading session could offer clues on how investors digest the unlock alongside the latest quarterly development, with volatility a possibility as new supply enters the market.