HDFC Securities is one of the leading financial services providers in India, offering a comprehensive range of brokerage, investment banking, wealth management, and distribution services. With the growing interest in unlisted shares among investors looking to diversify their portfolios, HDFC Securities unlisted shares have emerged as an attractive investment option. This blog aims to provide a detailed overview of HDFC Securities unlisted shares -their opportunities, risks, and processes involved in investing in them. In this blog, Get the latest HDFC Securities share price and stock performance info. Track the HDFC Securities stock and stay updated on the company’s financial health, stock valuation and more on HDFC Securities Share Price.
HDFC Securities: Company Overview
HDFC Securities Ltd is a subsidiary of HDFC Bank, one of India’s largest private sector banks. HDFC Securities was incorporated in 2000 and has emerged as a leading brokerage firm in the country over the past two decades.
Some key facts about HDFC Securities:
- Founded in 2000, headquartered in Mumbai with presence across over 200 cities in India.
- Subsidiary of HDFC Bank, one of India’s largest private banks.
- Leadership team includes names like Dhiraj Relli (MD & CEO) and Ashish Rathi (Whole-time director).
- Key offerings include brokerage services, wealth management, investment banking, and distribution of financial products.
- Over 4 million customer accounts and presence in over 200 cities make it a leading player.
- Strong financial performance with revenue of Rs 1,598 crore and profit of Rs 360 crore in FY22.
HDFC Securities has leveraged the large distribution network of its parent HDFC Bank to acquire customers at a fast pace. It has developed a strong online trading platform along with extensive branch network support. The company offers trading across equity, derivatives, commodities, currency derivatives, and mutual funds on its platforms.
The wealth management services help HNIs plan their investments across equities, fixed income, real estate, and alternate assets. It also extends loans against securities to customers. Under its investment banking arm, HDFC Securities offers capital raising, mergers and acquisitions, private equity syndication and other advisory services primarily to mid-cap and small-cap companies.
The strong parentage, wide range of offerings, hybrid model of online plus branches, and consistent focus on technology have enabled HDFC Securities to emerge as one of the leading retail focused financial services firms in India.
Financials and Valuations
Key financial highlights of HDFC Securities over the past few years:
- Revenue has grown at a CAGR of 13% over FY17-22 to reach Rs 1,598 crore in FY22.
- Profit after tax has risen at a CAGR of 18% from Rs 211 crore in FY17 to Rs 360 crore in FY22.
- Operating profit margins have remained stable at around 35% over the last 5 years
- Return on equity has averaged around 22% over the last 3 years
- The company has a debt free balance sheet with cash and investments of over Rs 1,100 crore as of Mar’22.
Currently, HDFC Securities share price is around Rs 425, trading at a trailing P/E of around 32 based on FY22 EPS of Rs 13.4. The company has outperformed broader indices over the past 1 year as well as 5 years. The share price has delivered 30% CAGR return over the past 5 years compared to 12% for Nifty.
Compared to key listed peers like ICICI Securities and Motilal Oswal, HDFC Securities trades at a premium valuation on account of its higher growth, higher profitability and robust return ratios. Its valuation premium is justified given the strong parentage, leadership position, high growth prospects and strong financial track record
Overall, HDFC Securities offers a unique play on the high growth Indian broking and wealth management industry. Its strong competitive positioning coupled with robust financial performance makes the stock an attractive long term investment from a fundamental perspective.
News and Events
Here are some recent news and events concerning HDFC Securities that have impacted HDFC Securities share price:
- September 2022 -Launched US stocks trading on its platform in partnership with Vested Finance. This opens up a new avenue of growth.
- July 2022 -Received in-principle approval from SEBI for setting up a fund management company. Further diversifies business.
- May 2022 -Acquired minority stake in fintech startup FypMoney to enhance digital capabilities.
- March 2022 -Board approved merger with HDFC Holdings and HDFC Investments subject to regulatory approvals. This can unlock value.
- February 2022 -Strong Q3FY22 results with 36% PAT growth on higher retail participation in equities.
- December 2021 -Entered agreement to acquire Essel Mutual Fund for Rs 175 crore, marking entry into asset management space.
Upcoming events that may influence HDFC Securities share price:
- Q3FY23 results scheduled in January 2023
- Progress on merger process with HDFC Holdings & Investments
- Ramp up in asset management business post Essel MF acquisition
- Traction in US stocks trading platform along with other digital initiatives
With strong growth momentum across its businesses, HDFC Securities looks well positioned for healthy growth in the coming years. The digitization of finance and expectations of sustained retail participation in equities augurs well for leading brokerage platforms like HDFC Securities.
Advantages
- Wider range of investment opportunities – Unlisted companies represent a much larger share of the overall corporate universe compared to listed companies.
- Early stage investments -Ability to invest in companies at an early stage even before they go for an IPO. Chance to participate in company’s high growth phase.
- liquidity premium -Unlisted shares tend to trade at lower valuations than their listed peers due to lack of liquidity. This illiquidity premium can result in higher returns for investors willing to stay invested for long term.
Challenges/Risks
- Illiquidity -Unlisted shares are not readily tradable on stock exchanges. Lack of liquidity makes exit difficult and can prolong holding period.
- Not accessible to all investors -Unlisted shares have higher minimum ticket sizes and can be accessed only by HNIs and institutional investors in private deals. Not available to retail investors.
- Price discovery -Due to lack of a transparent public trading platform, price discovery on unlisted shares is difficult and often opaque. Reliable inputs on fair value not easily available.
- Weak regulations -Regulatory oversight over trading and corporate governance norms for unlisted companies not as stringent as for listed peers. Higher risk from corporate governance perspective
- While unlisted shares carry higher risks relative to listed equities, they offer the advantage of diversification and possible higher returns due to illiquidity premium. Proper due diligence, calibrated exposure and long term orientation are musts while investing in unlisted space.
HDFC Securities Unlisted Shares
HDFC Securities unlisted portfolio includes shares of its parent HDFC Bank as well as other group entities like HDFC Ergo, HDFC Life etc. Here’s an overview:
- HDFC Bank shares comprise the biggest chunk. Investors can look to buy/sell HDFC Bank unlisted shares through the secondary market.
- These shares are sought after given the strong performance and growth delivered by HDFC Bank over the years. It is valued at premium to other banks.
- Liquidity on HDFC Bank unlisted shares is reasonable and can be accessed through brokers specializing in unlisted space.
- Other relatively liquid HDFC group unlisted shares include HDFC Life, HDFC ERGO etc. but volumes are lower than HDFC Bank shares.
- Prices of these unlisted shares tend to closely track their underlying listed shares. But they trade at slight discount to compensate for lower liquidity.
- HDFC Securities unlisted portfolio offers a good way to gain exposure to the solid growth delivered by HDFC group companies over the long term.
For HNI investors willing to invest for long term, the HDFC Securities unlisted portfolio offers a good diversification and exposure to quality businesses. The discount on these unlisted shares compared to their listed counterparts also offers an attractive opportunity. But investors need to be aware of risks around liquidity and corporate governance of unlisted companies while investing.
Investing in HDFC Securities Unlisted Shares
For those interested in buying/selling HDFC Securities unlisted shares, here is a brief overview:
- Eligibility and Investment Amount
- Only HNIs and institutional investors are permitted by company to acquire these unlisted shares.
- Minimum investment size is generally around Rs 25 lakhs for a single deal.
- KYC formalities need to be completed prior to any purchase/sale transaction.
Platforms and Process
No direct route available. Investors need to use specialized OTC platforms to buy/sell these unlisted shares.
- UnlistedArena, BuyUSell and Quickr are some of the popular platforms.
- Transactions are settled between buyer and seller with platform facilitating KYC, documentation and payment transfer.
- Demat transfer mechanism available to transfer shares.
Risk Management
Carry out due diligence on company’s fundamentals, growth outlook and valuations.
- Maintain overall portfolio allocation
- Ensure investments are made at fair value based on available information to avoid overpaying.
- Limit overall exposure to unlisted shares to moderate portion of portfolio to account for illiquidity.
- Stagger investments over time via Systematic Investment Plan instead of lumpsum allocation.
Maximising Returns
- Adopt long term orientation spanning 3-5 years to allow full potential to be realized.
- Use market volatility and liquidity events to accumulate holdings at favorable valuations.
- Opt for demat route rather than physical shares to enhance liquidity prospects post listing.
- Stay updated on company developments and newsflow to detect early listing or exit opportunities.
Also Read: ACC Share Price ( History from Harshad Mehta Scam 1992 to 2024)
Conclusion
HDFC Securities unlisted shares present a unique opportunity for HNI investors to gain exposure to the HDFC group’s strong growth in the banking, insurance and financial services space. While investing in them requires assuming higher risks relative to listed equities, the potential returns can also be proportionately higher thanks to the illiquidity premium. Investors need to exercise caution by following a disciplined approach of portfolio allocation, valuation analysis and risk management. Over a long term investment horizon, HDFC Securities unlisted portfolio can enhance overall portfolio diversification and returns.
FAQ:
Is HDFC Securities a broker?
Yes, HDFC Securities is one of the leading retail focused stockbroking firms in India. It offers trading services in equities, derivatives, currencies, commodities as well as demat account and online trading platforms to customers.
Can I buy unlisted shares?
Retail investors cannot directly buy unlisted shares. Only HNIs and institutional investors can buy these shares through private deals using specialized OTC platforms for unlisted securities.
What is the share name of HDFC Securities?
The listed entity is called HDFC Securities Ltd. Its shares trade on NSE and BSE with symbol HDFCSECUR and code 540746.
Is it good to invest in HDFC Securities?
HDFC Securities offers a good investment opportunity given its leadership position in fast growing segments like broking and investment banking. It has a strong track record of growth, profitability and returns. The company is valued at premium to justify its strengths.
Who heads HDFC Securities?
The company is headed by Managing Director and CEO Mr. Dhiraj Relli. Mr. Ashish Rathi serves as the Whole-time Director.
