HUDCO IPO – A BET ON AFFORDABLE HOUSING FOR ALL 2022

​The Modi administration is know for its execution of projects in time & it’s far more formidable to believe that the Affordable Housing for all scheme will be his pitch for 2019 general elections.

Housing and Urban Development Corporation (Hudco), a wholly-owned subsidiary of the Government of India is first of its kind IPO which is a step by the government to meet its disinvestment targets.HUDCO is a wholly owned government company with focus on housing and urban infrastructure finance in India. HUDCO primarily lends to urban infrastructure projects relating to water supply, roads & transport and power accounting for 69 per cent of the loan book.  Housing Finance forms the remaining 31 per cent of its loan book. It’s business model is skewed towards state government spending The success of this IPO will lay a trajectory for the government to make other govt. owned enterprises, publicly listed.

Proceeds from this 1200 crore IPO is to be used by the government unlike other IPO’s which use it for capex, debt repayment or to meet working capital requirements.The IPO is priced between Rs 56-60 and can be applied in lot sizes of 200 shares.

Financials At a P/E of around 14 plus and at a P/BV of around 1.3 plus. It has no listed peer to compare with.

ADVANTAGES TO THE COMPANY: 

  1. PAN India presence
  2. Zero default risk from the lending book exposure to state governments.
  3. The Company is set to play a significant role in PMAY under Housing for All (HFA) by 2022.
  4. Available at a fair valuation & a Rs 2/- discount to retail investors.
  5. Should show long term interest of big fund houses.

Risk : Default on the obligations by borrowers  primarily the private Cos. may adversely affect the financial metrics of the company, which is a key risk in the business of HUDCO.

ALL ABOUT LISTING : This listing is expected to give a return of Rs 24 per share i.e., a low risk target of Rs 80, a moderate risk target of Rs 90 (Rs 34 premium) a high risk target of Rs 99 (Rs 43 per share premium).

 DISCLAIMER I : No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and having low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer. 

DISCLAIMER II : Notwithstanding any opinions my views are speculative in nature which bares me to be a guarantor of 100 % accuracy with regards to future trend prediction & pricing targets

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Published by

Yash Dave

A student of Charted Financial Analyst (USA) & MBA Finance. My interests are mainly in the field of equity research. Keep updated for further research material.

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