HUDCO IPO
Company Profile
Incorporated in 1970, Housing and Urban Development Corporation Ltd (HUDCO) is a wholly-owned Government company with more than 46 years experience in providing loans for housing and urban infrastructure projects in India. They provides long term finance for construction of houses and to undertake housing and urban infrastructure development programs. Apart from the financing operations, Hudco offers consultancy services, promotes research and studies and help propagate use of local building materials, cost-effective and innovative construction technologies.
HUDCO offers loans for housing projects, such as urban and rural housing, co-operative housing, community toilets, slum upgradation, staff housing, repairs and renewals, private sector projects, land acquisition, and housing programs. They also offers take out finance for housing and infrastructure projects to state government, public agencies, and private corporate sector agencies.
Company provide loans for implementing agencies comprising state government bodies, co-operative societies, corporate employers, and community sectors; and building technology and rent to own schemes. It also provides finance for infrastructure projects in the sectors of water supply, sewerage, drainage, solid waste management, roads and transport, and electricity in the urban areas; and social infrastructure component, such as play/primary schools, working women hostels, health centers, play grounds, police stations, courts, jails, crematorium, etc. In addition, the company offers consultancy services, including URP services, environmental engineering, and government programs consultancy services; and disaster mitigation services. Further it provides home loans for individual.
Promoters
Company's Promoter is the President of India, acting through the Ministries.
Issue Details
Issue Open : 8 May'17 - 11 May'17
Issue Type : Book Building Issue IPO
Issue Size : 204,058,747 Equity Shares
Face Value : Rs. 10/- each
Issue Price : Rs. 56-60 per share
Market Lot : 200 shares
Minimum Order Quantity : 200 shares
Minimum application Amount : Rs. 12,000.00/-
Listing At : NSE, BSE
Tentative timetable in respect of the Offer:
Bid/Offer Opens On: May 8, 2017
Bid/Offer Closes On: May 11, 2017
Finalisation of Basis of Allotment: On or about May 17, 2017
Initiation of refunds: On or about May 18, 2017
Credit of Equity Shares to demat accounts: On or about May 18, 2017
Commencement of trading of the Equity Shares on the Stock Exchanges: May 19, 2017
The Hudco IPO is a pure offer for sale which will see the government sell a 10% stake in the company. Hudco will not receive any proceeds from the sale of shares.
How has the company performed all this while:
The revenue of the company has shown continuous growth except for in the year of ending 31 March 2016, when it fell a little in comparison with preceding year. As such the current issue for quick earners is a good option, but need to consider various other factors and upcoming government policies if you want to hold it for long term.
If the lenders start lending directly to State Governments, it will be have a huge negative impact on operations of HUDCO. It's major operative income being from Financing, makes it vulnerable to great related policy changes by Government in financing sector. Also default on the obligations by borrowers may adversely affect the financial metrics of the company, which is a key risk in the business of HUDCO, say analysts. Social housing segment exposes the company to high NPA's in the future
Overall, the companies recent past performance has been satisfactory. In fact a magnet for investors who want to make good returns from it.
Another positive point is it has to comply with CPSE Capital Restructuring Guidelines, it has to pay a minimal annual dividend of 30 percent of its PAT or 5 percent of its net worth, whichever is higher, unless an exemption is provided in accordance with the CPSE Capital Restructuring Guidelines.
What to expect from this IPO?
We like HUDCO’s dual focus toward infrastructure development & housing finance, sectors that have emerged to be of primal focus for the Centre. With ~ 90% exposure of its loan portfolio coming from state governments & their agencies, it has managed to maintain its AAA rating and gain access to a diversified & low cost funding base.
The HUDCO IPO, valued as 1.25X price to book value in its upper price band, is kickstarting the Centre’s disinvestment programme for FY18 in order to raise funds & unlock value. We believe that there the IPO is attractively priced considering its long standing relationships with state governments, comfortable NIM & debt position, ability to raise funds from a wide variety of institutional & non institutional sources, healthy asset quality & prudent approach. We thereby recommend a SUBSCRIBE on the HUDCO IPO on Day 1 itself before it is oversubscribed.
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