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HUDCO Q2FY24: Solid loan book growth driven by urban infra

HUDCO Q2FY24: Solid loan book growth driven by urban infra

HUDCO Q2FY24: Solid loan book growth driven by urban infra

Company Name: Housing & Urban Development Corporation Ltd | NSE Code: HUDCO | BSE Code: 540530 | 52 Week high/low: 354 / 74.0 | CMP: INR 216 | Mcap: INR 43,319 Cr | P/BV – 2.53

About the stock
▶️Housing and Urban Development Corporation Ltd (HUDCO) is public sector enterprise primarily engaged in the business of financing housing and urban development projects in India. The company headquartered in national capital, New Delhi and operate through 21 regional offices and 11 development offices across India.
Apart from financing business, it also provides consultancy services for government programmes and advising on urban and regional planning, design and development, environmental engineering and social development.

Healthy expansion in loan book (up 36% YoY), While Sanctions and Disbursement grew multiple fold
➡️HUDCO’s loan book has report a solid growth during quarter, growing 36% YoY (+7% Qoq) to 1,11,068 Cr led by strong growth in urban infra book. Urban infra book jumped 11% YoY (+1% QoQ) to 66,857 Cr while affordable housing segment muted at 3% YoY growth and 1% QoQ to 44,211 Cr. This lead to increased the urban infra weight to 60% in overall loan book while affordable housing reduced by same.

➡️Sanctions jump 9.8x fold YoY (+442% QoQ) to 76,472 Cr driven by pure urban infra growth. Sanction under urban infra grew 929% YoY (+442% QoQ) to 76,472 Cr. while affordable housing contribute 0% during the quarter.

➡️Disbursement report solid expansion grew 5.8x YoY (+ 72% QoQ) to 21,699 Cr supported by urban infra segment. Urban infra segment disbursement jump 538% YoY (+65% QoQ) to 20,583 Cr while Affordable housing disbursement grew 124% YoY (+752% QoQ) to 1,116 Cr.

➡️Borrowing grew higher than the loan book growth, grew 47% YoY (+43% QoQ) to 93,364 Cr. Borrowing is the mix of international and domestic sources to meet business growth and reduce the cost of borrowing.

Book Growth (As on)  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Loan 111068 81594 36% 1,03,815 7%
Urban Infra 66,857 38,674 73% 60,047 11%
Affordable housing 44,211 42,920 3% 43,768 1%
Sanction 76,472 7,808 879% 14,097 442%
Urban Infra 76,472 7,435 929% 14,097 442%
Affordable housing 0 373 -100% 0 #DIV/0!
Disbursement  21,699 3,723 483% 12,625 72%
Urban Infra 20,583 3,225 538% 12,494 65%
Affordable housing 1,116 498 124% 131 752%
Borrowings  93,364.67 63,318.46 47% 65,187.48 43%

NII jump 27% YoY driven book expansion; PAT boom on lower provision and higher other income
➡️Interest income grew 33% YoY (+13% QoQ) to 2,459 Cr led by book expansion while yield down 10 bps YoY to 9.24%. NII jump 27% YoY (+12% QoQ) to 797 Cr led by healthy growth in book while NIMs decline 21 bps YoY and stable QoQ to 3.01%. PPOP increased 32% YoY (+15% QoQ) to 767cr on stable OpEx growth. PAT boom 52% YoY (+23% QoQ) to 689 Cr driven by lower provision (down 749% YoY) and higher other income (up 81% YoY).

Years  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Interest income  2,459 1,844 33% 2,175 13%
Interest expenses 1,662 1,217 37% 1,464 14%
NII 797 627 27% 711 12%
Other income  67 37 81% 23 196%
Total Net income 864 664 30% 734 18%
Employee expenses 66 55 19% 40 65%
Other OpEx 31 30 5% 28 14%
Total Opex  97 85 14% 67 44%
PPOP 767 579 32% 666 15%
Provision -233 -27 749% -19 1147%
PBT 1,000 606 65% 685 46%
Tax expenses  311 155 101% 127 145%
Tax rate  31% 26% 22% 19% 68%
PAT  689 452 52% 558 23%
PAT% 27% 24% 14% 25% 7%
EPS 3.44 2.26 52% 2.79 23%
No. of equity shares  200 200 0% 200 0%

Asset quality stood best in the industry – GNPA/NPNPA down 132 bps/18 bps YoY
➡️HUDCO’s asset quality stand best in the industry with GNPA and NNPA at 2.04% and 0.31% respectively. GNPA/NNPA decline 132 bps/18 bps YoY and 38 bps/2 bps QoQ. Further private sector book decline to 1.83% from 2,50% in FY24 while Government backed book increased to 98.17% from 97.50% in FY24. This will lead to decline default of loans as government book is highly secured. Provision coverage ratio decline 28 bps and 101 QoQ to stood at 85.6% as of Q2FY25.

Asset Quality Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
GNPA 2.04 3.36 -132 2.42 -38
NNPA 0.31 0.49 -18 0.33 -2

Valuations and key metrics
➡️Currently the stock is trading at 2.53x price to book value. NIMs contract by 21 bps YoY and remain stable QoQ to 3.01% led by the expansion in CoF and decline in yield. ROA jump by 20 bps YoY and 16 bps QoQ to 2.4% while ROE rise 315 bps YoY and 164 bps QoQ to 14.56%. Company capital position CAR down 1614 bps YoY to stood at 57.65% but still above the RBI guidelines.

Key metrics  Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
Yield  9.24 9.34 -10 9.06 18
CoF 7.46 7.63 -17 7.36 10
NIMs 3.01 3.22 -21 3 1
ROA 2.4 2.2 20 2.24 16
ROE 14.56 11.41 315 12.92 164
PCR 85.6 85.88 -28 86.61 -101
CAR 57.65 73.79 -1614 5765

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