Housing & Urban Development Corporation Ltd Q4 FY25 Earnings Analysis

- HUDCO targets strong loan book growth with a CAGR of 15%-16% by 2030, aiming for INR 300,000 crores. - Short-term growth projection is higher, with 30%-40% CAGR expected over the next 1-2 years. - Loan book expected to grow to around INR 1.5 lakh crores by FY 26 from current levels. - Growth is expected to be sustained primarily through urban infrastructure (60%) and affordable housing (40%). - Robust pipeline with committed liabilities exceeding INR 1.2 lakh crores supports continued growth. - Focus on multi-sector, multi-state lending, backed by government initiatives like PMAY 2.0 and infrastructure development plans. - Management expects growth to moderate after 2 years but remain healthy and sustainable. - Expansion driven by infrastructure financing aligned with government’s Viksit Bharat plan and increasing state-level competition.

- HUDCO expects robust loan book growth, targeting around INR 150,000 crores for FY26 and INR 300,000 crores by 2030, with an average CAGR of 15%-16%, potentially up to 20% in the next 3-4 years. - Profitability has grown significantly, with a 40% profit increase last year; management is confident in sustaining a return on assets (ROA) around 2.4% to 2.5%. - Net interest margins (NIMs) are maintained at around 3.2%, spreads approximately 2.4%, contributing to stable earnings growth. - Operating expenses are expected to be managed efficiently or reduced due to retirements and new recruitments. - Asset quality improvements and write-backs support profit sustainability. - Management assures sustainable earnings growth driven by infrastructure financing opportunities aligned with government plans, with no expected requirement for equity infusion through 2030. - EPS growth is expected to follow the profit growth trajectory with sustained financial health indicators.

- HUDCO has signed an MoU for a major port development project near JNPT, valued around INR 25,000 crores, to be executed progressively over a couple of years. - The company is focusing on growth in urban infrastructure and affordable housing, including the upcoming Pradhan Mantri Awas Yojana 2.0 starting next year. - HUDCO plans significant capital expenditure projects in urban infrastructure segments like roads, urban mobility, water supply, sewage, metro, and energy. - Loan book growth is targeted at INR 1.5 lakh crores by next fiscal and INR 300,000 crores by 2030, with a CAGR of 15%-16%. - HUDCO is enhancing multi-sector financing including rural infrastructure and private sector funding as part of strategic expansion. - No immediate equity capital infusion expected through 2030 due to strong capital adequacy (CRAR ~47%) and net worth growth. - Investment in internal systems including IT upgrades and recruitment (65 new officers) to support these growth plans.

- HUDCO is continuously raising external commercial borrowings (ECBs) to diversify resources and reduce borrowing costs. - Currently, around 17% of total borrowings come from ECBs and FCNR (B), with plans to increase this to about 20%. - Recent funds were raised from the Japanese yen market providing interest rate arbitrage benefits. - The weighted average cost of borrowing has reduced to around 6.8%. - No equity infusion is expected in the medium term; by 2030, projections indicate no capital requirement due to strong CRAR (~47%) and increasing net worth. - Debt-equity ratio and capital adequacy are well maintained, supported by a large portion of loans backed by state government guarantees, which carry lower risk weights. - HUDCO plans to continue debt fundraising but no plans for new equity raising have been indicated.

- HUDCO's current committed liabilities (order book) stand at more than INR 1.2 lakh crores. - The order book is continually growing as the company maintains a robust pipeline of projects. - Sanctions have increased significantly from INR 18,000 crores to INR 92,000 crores on a quarterly basis. - The company has been witnessing a continual growth trajectory in disbursements and loan book size. - Loan book increased by 41% year-on-year from INR 84,000 crores to INR 118,000 crores as of Q3 FY25. - The strong pipeline of projects supports continued loan growth and increasing order book size.