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IPO: Housing & Urban Development Corporation Limited (HUDCO)

Business Model-

HUDCO, a PSU miniratna firm, is a wholly-owned Government company with more than 46 years experience in providing loans for housing and urban infrastructure projects in India. It plays a key role in various Government’s schemes to develop the Indian housing and urban infrastructure sectors. HUDCO’s total loan portfolio as on 31st December 2017 was Rs. 36386 crores. As on 31st December 2016, HUDCO’s Housing Finance Loans comprises of 31% of total outstanding loan portfolio, whereas Urban Infrastructure Finance loans and project linked bonds comprises of 69%. Housing finance loans are classified into Social housing, Residential real estate, and Retail finance (branded as HUDCO Niwas). With respect to urban infrastructure finance, HUDCO gives loans for projects relating to water supply, roads and transport, power, among others. As on 31st December 2017, 89.93% of total loan portfolio were to State Governments and their agencies.

 

Objective of Issue-

The issue comprises sale of 10.2% stake by the central government through an offer for sale (OFS), post which it will have 89.8% stake and thus no fresh issue of shares is involved.

 

Financials-                                  

(INR in crores)

Particulars FY12 FY 13 FY14 FY15 FY16 9M 2017
Revenue 2778.63 2923.24 2993.85 3427.77 3350.08 2677.99
Net Earnings 621.6 699.7 734 768.3 810.7 496.3

HUDCO has given total revenue growth of 5% compounded annually whereas the net earnings grew at 7% compounded annually between FY-12 and FY-16. By  looking at the statement of 9 months FY17, the main concern is with NPAs (Non-Performing Assets) which stands at 6.80% (Gross) which is due to private sector entities comprising of 5.80% of total Gross NPAs whereas total Net NPAs stands at 1.51%.

 

Issue Details –

   
Issue Period May 8, 2017 to May 11, 2017
Price Band INR 56 – INR 60
Bid Lot 200 Equity Shares and in multiple of thereafter
Discount INR 2 per share for Retail Investors and eligible employees
Issue Size 204058747 Equity Shares (INR 1224.35 Crores)
Face Value INR 10/- per share
Listing at NSE and BSE

 

Valuation-

At the upper band, the price is valued at 1.3 times its book value as on 9 months FY2017 which seems to attractive. Whereas P/E ratio of 15.4 times also seems to be fairly valued if compared with its peers.

 

Conclusion-

The IPO looks attractive and we recommend subscribe rating for long term investors.

 

One Comment

  • Smart Nivesh

    HUDCO made strong market debut, listing at Rs. 75.45 against issue price of 58 to Retail Investors . A 30% listing gains to Retail Investors. Did you get the allotment?

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