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May 08, 2017 02:08 PM IST | Source: Moneycontrol.com

Subscribe to Housing and Urban Development Corporation Ltd: HEM Securities

HEM Securities has come out with its report on Housing and Urban Development Corporation Ltd. The research firm has recommended to "Subscribe " the IPO in its research report as on May 11 , 2017.

 
 
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HEM Securities report on Housing and Urban Development Corporation Ltd

Co is a wholly –owned Govt co providing loans for housing & urban infrastructure projects in India. As at Dec 31,2016,co’s total sanctioned loans since inception was Rs 1,631,372.4 mil-lion, Rs 602,288.7 million of which 36.92 % were housing finance loans & Rs 1,029,083.7 million of which or 63.08 % were Urban infrastructure finance loans. As at Dec 31,2016 co’s total outstanding Loan portfolio was Rs 363,858.2 million. Rs 112,281.4 million of which , or 30.86 % were Housing Finance loans & Rs 251,576.8 million of which , or 69.14% were Urban Infrastructure Finance loans & project –linked bonds. Co classify its housing finance loans into social housing ,residential real estate & retail finance ,which is branded as HUDCO Niwas (collectively Housing Finance”).

Reasons to "Subscribe"

Co have been conferred the status of Miniratna (Category-I public Sector Enterprise) by the GOI. Co’s borrowers under Urban Infrastructure Finance are primarily State Governments & their agencies. Domestically, co hold a credit rating of AAA, the highest credit rating ,for long term borrowings from each of CARE,ICRA & IRRPL, which lowers co’s cost of borrowing. In addition to co’s registered & corporate office & research & training wing in New Delhi ,co have 21 regional offices & 11 development offices, giving it a presence in the capital city of each state ( except for Gujarat & Andhra Pradesh,where co have an offices in Ahmedabad & vijaywada respectively), the major city of three Union territories & in other cities in two States.

Valuation

At price band of Rs 56-60 ,co is bringing the issue at p/b multiple of around 1.25-1.35 .Co with established track record of profitable since 1946 & strong NIM plays a key role in various Govt’s schemes to develop Indian housing & urban infrastructure. At cur-rent level,co is reasonably priced & hence we recommend "Sub-scribe" on issue.

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