As part of its divestment programme, the government is divesting its 10 per cent stake in the Housing and Urban Development Corporation (Hudco). The issue will open on May 8 and close on May 11. The price band of the issue is Rs 56-60. Hudco is a wholly owned government company with focus on Housing and Urban Infrastructure Finance in India. Brokerage house Angel broking has recommended ‘Subscribe’ to the issue and said, ” HUDCO has a unique blend of business with focus on financing both housing and urban infrastructure, which has vast untapped opportunity in India. Focus on government sponsored projects and ability to raise funds at a competitive price provides earnings visibility for many years. ”
Below are the 5 things to know about the company
About the company
HUDCO is a wholly-owned government company with more than 46 years experience in providing loans for housing and urban infrastructure projects in India. The corporation has been playing a key role in various government schemes to develop the Indian housing and urban infrastructure sector. At the end of 9MFY2017, HUDCO had total outstanding loan portfolio of Rs 36,385cr, of which 31% was towards Housing Finance and balance 69% was towards the Urban Infrastructure Finance segment. Of the total portfolio around 90% of the loans were given to various State Governments and their agencies.
The two segments which are served by HUDCO are Urban Infrastructure and Housing Finance. In the Urban infrastructure finance segment, HUDCO gives loans for projects relating to water supply, roads & transport and power. While the Housing Finance Loans are classified into Social Housing, Residential real estate, and Retail Finance, which is branded as HUDCO Niwas.
Key management personnel
Ravi Kanth Medithi, chairman and MD is an IAS officer with over 29 years of experience in public administration. Prior to this he has held various positions with Government of India, Government of Kerala and Joint Secretary, Ministry of Power, Government of India.
HUDCO has AAA rating on its long-term borrowings from ICRA & CARE, which has helped it in borrowing at very competitive rates from the market. Despite funding to large and long gestation projects HUDCO has been able to maintain NIM in the range of 4.6-4.3% over the last three years.
Issuance of 20.4cr Equity shares of face value via IPO at an offer price band of Rs 56-60. The issue size is Rs 1,128 cr – Rs 1210 cr at the price band and there is a discount of Rs 2/ share for retail category and for employees.
Objects of the offer
To achieve the benefit of listing the stock on the exchanges