Hudco stock makes dream debut, rises 20.8% to close at ₹72.50
MUMBAI: Shares of Housing and Urban Development Corp. Ltd (Hudco) made a stellar stock markets debut on Friday. It ended with 20.8% gain at ₹72.50 per share on BSE.
The government-run firm’s shares opened at ₹73.45 offering a premium of 22.4% over its issue price of ₹60 apiece. During the day, it touched a high of ₹77.80 and a low of ₹70.55. BSE’s benchmark Sensex ended the day at 30,464.92 points, up 0.1% from its previous close.
Hudco’s issue—which was open from 8 to 11 May, with a price band of Rs56-60 apiece— saw a subscription of 80 times. Through the sale, the government aims to sell 10.19% stake in the company which is engaged in wholesale funding and providing loans for housing and urban infrastructure projects.
The portion reserved for qualified institutional buyers (QIBs) was subscribed 55.45 times, while non-institutional investors saw a subscription of 330.36 times and retail investors’ category was subscribed about 11 times.
Out of its total loan portfolio of around ₹36,386 crore or 89.93% was extended to state governments and their agencies as on 31 December 2016.
Urban infrastructure projects relating to water supply, roads, transport and power account for 69% of Hudco’s loan book. The remaining 31% of its loan portfolio goes to housing finance.
Hudco reported gross nonperforming assets (NPAs) and net NPAs of 6.80% and 1.51%, respectively, in the first nine months of fiscal year 2017. The high NPA level was due to large defaults from some private companies to which it had previous exposure, while its NPAs from the government sector is only 0.75%, said Angel Broking in a note on 4 May.
According to Angel Broking, Hudco has already made substantial provisions on private sector NPAs and stopped lending to them from fiscal 2013, and hence, material change is not expected in NPAs in the near term.
“Further, a provisioning coverage ratio of 72% lends enough comfort on the loan book,” it said.