India's premier private lender, HDFC Bank, is gearing up for the much-anticipated initial public offering (IPO) of its subsidiary, HDB Financial Services, according to sources cited in a report by the Economic Times.

Holding a substantial 94.7% stake in HDB Financial Services, HDFC Bank plans to divest around 10% in the IPO, potentially resulting in an IPO size ranging from ₹7,500 to ₹10,000 crore.

As a non-deposit-taking lender, HDB Financial Services is expected to achieve a valuation between $9 billion to $12 billion (approximately ₹75,000 to ₹1 lakh crore) during the IPO, contingent upon market conditions.

The bank has commenced discussions with leading investment banks to gauge interest and evaluate valuations for the proposed IPO. Additionally, there are deliberations regarding a pre-IPO share placement with potential investors.

HDFC Bank is considering a timeline for the share sale of its non-banking financial services arm, aiming for either the last quarter of 2024 or the first quarter of 2025. A successful IPO in 2024 would mark a significant milestone and the first listing from the merged HDFC Bank and HDFC entity.

Regulatory compliance is a crucial aspect prompting the urgency for HDB's IPO, as the company must list before September 2025 to adhere to Reserve Bank of India regulations. With 1,492 branches nationwide as of March 31, 2023, HDB stands as one of the largest listed finance companies in terms of market capitalization.

Financially, HDB reported total revenue from operations of ₹12,403 crore and a profit after tax of ₹1,959 crore for the same period. Its core focus areas include vehicle loans, loans against property, and personal loans.

The positive sentiment has already been reflected in HDB shares, which have surged over 30% in the past three months in the unlisted market, indicating promising prospects for its debut.