Where is SEBI? HDB Financials 66% Discount to Grey Market Valuation.

The broker is gone. He has stopped picking up calls. He is not responding. He has changed his company and blames management for all the problems. Revenue targets were achieved 3 times by selling unlisted shares to retail clients and semi-HNI clients.

This time, it's not banks but wealth outfits and distributors who are part of this massive growth of the steroid-based product called unlisted shares.

India's unlisted securities market, once a niche segment, has seen a boom in investor interest, largely driven by the promise of pre-IPO profits. However, the recent case of HDB Financial Services' IPO pricing has thrown a spotlight on a rising menace: mis-selling at unjustified valuations.

As HDB Financial’s IPO price band landed like a hammer blow—66% lower than recent grey market prices—the real victims of this disconnect are not large institutions. It is the retail and semi-HNI investors, who were sold unlisted shares at exorbitant valuations with grand promises, now left nursing massive losses and the most basic question now comes up: Where is SEBI?

HDB Financial Services Ltd, the non-banking finance arm of HDFC Bank, has caught the IPO market off guard. When announcing its Initial Public Offering (IPO) price band today, the company set it at ₹700–740 per share, a figure sharply lower than expectations and nearly 66% discounted from grey market valuations.

Shockwave in Grey Market

Unlisted HDB Financial shares had recently been trading around ₹1,250, after dipping from a peak of ₹1,455 in September 2024. Against that backdrop, even the upper limit of ₹740 appears decidedly subdued. For investors anticipating a large tick-up at listing, this likely pricing has triggered surprise and anxiety about early returns.

No Outlier in Conservative IPO Pricing

HDB is far from the first company to underprice relative to the grey market. Recent corporate IPOs—including Tata Technologies, AGS Transact, UTI AMC, and PB Fintech—have similarly entered the public market with noticeable discounts. Analysts suggest the strategy roots in caution: unlisted assets can be volatile and opaque, and issuers prefer to err on the side of investor-friendly pricing.

Grey Market Premium Still High

Just before the price band release, HDB Financials’ grey-market-premium (GMP) was hovering around ₹103, indicating robust demand despite the dip.

Brokers and intermediaries active in the unlisted market have often capitalised on information asymmetry, pushing stocks based on inflated narratives. The typical pitch:

• “This company is expected to list at a ₹1.5 lakh crore valuation.”
• “The IPO is imminent, and you're getting in early.”
• “Limited availability—grab it before institutions do.”

Many of these sales are made without offering rational valuation metrics, audited financials, or proper risk disclosures. Investors are lured by stories rather than substance, leading to speculative bets based on grey market sentiment rather than financial due diligence.

 The danger lies in pricing stocks like startups while treating them like blue-chip stocks. Some unlisted shares are sold at valuations resembling mature, listed firms without any discount for lack of liquidity, transparency, or exit options.

The unlisted shares market in India is entirely outside SEBI’s regulatory perimeter—a shocking fact considering how aggressively it is being promoted on social media, Telegram groups, and through investment "consultants".

• There are no KYC norms, no valuation guidelines.
• Many of these brokers have no fiduciary obligation to act in the client's best interest.
• There is zero oversight on pricing methodology or disclosures.
• SEBI mandates a mountain of disclosures for IPOs, but nothing for unlisted share transactions, despite crores being mobilised.

This creates the perfect storm for mis-selling and exploitation, especially of aspirational, first-generation investors from Tier 2 and Tier 3 towns, who blindly trust “private placement” pitches from friends, brokers, or online groups.

A Semi-HNI Investor’s Plight

Consider a real-world example:

A semi-HNI investor from Pune invested ₹35 lakhs in HDB Financial’s unlisted shares at ₹1,350 in early 2024 based on broker advice and grey market whispers. With the IPO price now revealed at ₹740, his notional loss stands at over ₹15 lakh—more than 40% wiped out overnight, with no accountability from the broker who sold him the dream.

He now asks:

“Would SEBI allow a mutual fund to show a 50% higher NAV than its real value and sell units to investors? Then how is this allowed in the unlisted space?”

He’s right. The lack of regulatory parity is glaring.

IPO Snapshot

• Issue Size: ₹12,500 crore total, comprising ₹2,500 crore fresh issuance and ₹10,000 crore offer-for-sale by HDFC Bank
• Anchor Bidding: Set for June 24, 2025.
• Public Subscription Window: June 25–27, 2025
• Basis of Allotment: Expected June 30; refunds & share credits likely July 1; listing scheduled for July 2
• Post-Money Valuation Outlook: Positioned around ₹62,000 crore (~US $7.2 billion) at ₹740 price cap