1. HUDCO lists at 22% premium after massive IPO oversubscription

HUDCO lists at 22% premium after massive IPO oversubscription

In line with the massive subscription of its initial public offer (IPO), shares of Housing and Urban Development Corporation (HUDCO) got a bumper listing on both the exchanges today.

By: | Updated: May 19, 2017 10:46 AM
HUDCO’s shares listed at a premium of over 22% and at 10:15 am, the shares were trading up 27.16% at Rs 76.30 on the NSE and up 28.50% at Rs 77.10 on the BSE.

In line with the massive 79 times subscription of its initial public offer (IPO), shares of Housing and Urban Development Corporation (HUDCO) got a bumper listing on both the exchanges today. The government owned lender’s shares listed at a premium of over 22% and at 10:15 am, the shares were trading up 27.16% at Rs 76.30 on the NSE and up 28.50% at Rs 77.10 on the BSE.

The IPO was open from May 8-11 with an objective of raising proceeds ranging between Rs 1,128 crore to Rs 1,210 crore at its price band of Rs 56-60 per share with a discount of Rs 2 per share for retail investors. The issue was a part of government’s efforts to meet its disinvestment target. The issue comprised of a sale of 20,40,58,747 equity shares (10 percent paid-up capital) by the central government through an offer for sale (OFS).

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HUDCO is a wholly-owned government company and has more than 46 years’ experience in providing loans for housing and urban infrastructure projects in India. The company boasts of a strong financial performance including consistently increasing revenues and strong profitability. The company’s top-line has increased in each of the last four years and looks on track of doing an encore this year as well. Similarly, its proven business model means profits have remained strong and have followed a growth trajectory in the time frame.

HUDCO’s sustained performance and profitability earned it the Miniratna status in fiscal 2005. While its earnings have improved, profitability has slipped a bit in the last six months. Nevertheless, net profit margin at 19.9% is still quite strong given its huge size.

Being a profitable PSU, HUDCO pays a regular dividend and this is something retail investors will find attractive. The company is required to pay a minimal annual dividend of 30% of its profit after tax (PAT) or 5% of its net worth, whichever is higher. Although this was not maintained in the latest financial year, the dividend rate of 5% was still quite attractive.

As of 30 September 2016, the total assets under management (AUMs) for the wholly-owned government company were at about Rs 36,110 crore, which included housing finance assets of Rs 11,290 crore and urban infrastructure finances of Rs 24,820 crore.

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