HUDCO shares soar 15% to hit record high; multibagger PSU stock now up 369% in 1 year

Multibagger stock Housing & Urban Development Corporation Ltd (HUDCO) rallied 15 per cent to hit a fresh record high on Friday, taking its one-year gains to 369 per cent. This was the sixth day of gains for HUDCO shares amid optimism over its business prospects after the government accorded Navratna status to the PSU, with the rating agency ICRA also re-affirming its credit rating on the company.

ICRA on April 24 suggested a stable outlook for HUDCO, as it feels the PSU will remain strategically important to the government for the implementation of its policy in the high priority housing and urban development sectors. HUDCO is likely to maintain adequate profitability, borrowing, and capitalisation profiles, it said.

On Friday, the HUDCO stock rose 15.28 per cent to hit a high of Rs 234.20 on BSE.

HUDCO's borrowing programmes derive significant strength from its sovereign ownership (75.17 per cent government stake) and its important role as a nodal agency for the implementation of government policies in the high priority sectors of social housing and urban infrastructure.

The ratings, ICRA said, also draw comfort from the relatively low credit risk profile of HUDCO's portfolio, given the focus on government-sponsored urban infrastructure and other projects backed by guarantees and budgetary provisions from central/state governments for debt servicing by the concerned entities.

"The ratings also factor in HUDCO's comfortable capitalisation level, diversified borrowing profile and good financial flexibility, given its sovereign ownership, which supports its liquidity profile even though the relatively less risky exposure results in modest earnings," ICRA said.

ICRA said while the credit risk for HUDCO's loan portfolio is mitigated by the presence of government guarantees, the weak financial profile of many of the state governments remains a risk.

HUDCO' s gross and net stage 3 percentages remain under control and stood comfortable at 3.1 per cent and 0.4 per cent, respectively, as on December 31, 2023.

HUDCO witnessed modest portfolio growth in 9M FY2024. With the pick-up in sanctions and disbursements in the latter half of FY2024, ICRA expects the company to report good growth going forward. ICRA also took cognisance of HUDCO's inability to meet the conditions for continuation as a housing finance company (HFC) under the revised regulatory definition. In this regard, the company is in the process of seeking fresh registration under the Reserve Bank of India (RBI).