Housing and Urban Development Corporation Ltd (Hudco), a fully-owned Indian government company, will be hitting the capital markets with its Rs 1,200-crore initial public offering (IPO) next week. The 46-year-old company is issuing shares in the price band of Rs 56-60 per equity share.
The public issue, comprising 204.1 million equity shares by way of stake dilution by the government, opens on May 8 and closes on May 11 (May 10 is a public holiday on account of Buddha Purnima).
Since the public issue comprises stake dilution by existing investors, the company won't receive any money from the IPO, which is part of the disinvestment programme for the current fiscal.
Highlights of the issue and the company's performance (courtesy: Motilal Oswal Securities):
The company provides long term finance for construction of houses and to undertake housing and urban infrastructure development programmes.
Hudco offers consultancy services, promotes research and studies and help propagate use of local building materials, cost-effective and innovative construction technologies.
Its net profit for the three years has risen consistently, from Rs 734 crore in 2013-14, to Rs 768 crore in 2014-15 and Rs 810 crore in 2015-16.
At the upper end of the price band of Rs 60, the company is valued at 1.4x FY16 P/B.
Gross NPAs were at around 6.8 percent and net NPAs at 1.51 percent.
The company is set to play vital role in Pradhan Mantri Awas Yojna (PMAY) under Housing for All (HFA) by 2022 and thus has bright prospects going forward.
The migration from rural to urban India is leading to a shortage of housing and according to government data, the shortage in urban housing between FY 2012 and FY 2017 was estimated at close to 19 million dwellings.
To reduce this shortage, the government has launched various schemes. Under the 'Housing for All' scheme, the government plans to build 20 million urban homes and 30 million rural homes by 2022.
The credit-linked scheme under the urban programme, which offers 6.5 percent interest rate subsidy, has already started gaining traction and HUDCO is playing the key role of central nodal agency.
Hudco's outstanding loans (assets under management) stood at Rs 35,664.9 crore in FY16.
