HDB Financial Services Limited - IPO

1. Our Promoter may be required to significantly reduce its ownership in our Company, i.e., to less than 20% (or any such higher percentage with prior RBI approval) on account of overlapping business with our Promoter and one of the members of our Promoter Group if the draft circular issued by the RBI on October 4, 2024 is implemented in its current form, which may have a material adverse impact on our business operations, financial position and share price.

2. Our Gross Stage 3 Loans amounted to 2.26% of Total Gross Loans as at March 31, 2025, which was an increase from 1.90% as at March 31, 2024. Non-payment or default by our customers, our inability to provide adequate provisioning coverage for non-performing assets or change in regulatorily mandated provisioning requirements may adversely affect our financial condition and results of operations.

3. As at March 31, 2025, unsecured loans comprised 26.99% of our Total Gross Loans, which is a decrease from 28.66% as at March 31, 2024. Our unsecured loan portfolio is not supported by any collateral that could help ensure repayment of the loan, and in the event of non-payment by a borrower of one of these loans, we may be unable to collect the unpaid balance.

4. As at March 31, 2025, secured loans comprised 73.01% of our Total Gross Loans. The value of collateral for our secured loans may decrease or we may experience delays in enforcing collateral, impacting our ability to fully recover the collateral value, thereby exposing us to potential loss that could adversely affect our business, results of operations, cash flows and financial condition

5. We may face asset-liability mismatches in the future, which may cause liquidity concerns and consequently affect our profitability, cash flows, business, results of operations and financial condition.

6. Our Company, Promoter and Directors are involved in certain legal proceedings, including actions taken and penalties imposed by relevant regulatory authorities, and any adverse outcomes in such proceedings may have a material adverse effect on our reputation, business, results of operations, cash flows and financial conditions.

7. We have incurred negative cash flows from operating, investing and financing activities in Fiscal 2023 and may continue to do so as we invest in further expanding our distribution network in India.

8. The Offer consists of an offer for sale, the proceeds of which will not be available to the Company.

9. We provide business process outsourcing ("BPO") services such as back office, sales support and collection services to our Promoter, HDFC Bank, and the profit before tax from BPO services was 2.44% of the total profit before tax of our Company as of March 31, 2025. Discontinuation of such services to HDFC Bank may adversely impact our business, results of operations and financial condition.

10. We rely on the parentage of our Promoter. However, the interests of the Promoter as our controlling shareholder may conflict with our interests or the interests of our other shareholders. Currently, our Company offers the same products as those offered by our Promoter and certain members of our Promoter Group, namely, HDFC Sales Private Limited and HDFC Securities Limited.