@manojag wrote:
HUDCO acronym for HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED is entering the capital market in April. Market participants are mistaking HUDCO as a housing finance company and comparing it with the likes of PNB Housing Finance etc. The fact is totally opposite as 89.88% of the loan book of HUDCO is to State governments and its agencies and 10.17% to private sector.
Housing Finance of total loan portfolio is 31.28% (30.34% to state govt for social housing loans, 0.40% to individuals and 0.57% to private sector companies) and 68.72% of the total loan portfolio is advanced for Urban Infrastructure like water supply projects, Roads and Transport, Power, Sewage and Drainage etc.
Average loan size for Housing finance is Rs.56.66 Crores and for Urban Infra it is Rs.54.54 Crores.
Further fixed rate borrowing constitutes 97.94% of HUDCO’s borrowings whereas it has lent 81.32% of its loans to borrowers at floating rate of interest which is a very serious mismatch in a falling interest rate scenario.
HUDCO was allowed to borrow at very attractive rate of interest via Tax free bonds till 2016 and tax free bonds constitutes 78% of HUDCO’s total borrowing. In the current budget the Central Govt has not provided this facility to HUDCO to borrow via tax free bonds and this will increase the cost of funds for HUDCO substantially.
Comparing HUDCO with REC would make one realise that the asking issue price of 50/- is very steep and fraught with huge risk for the investing public.
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