HUDCO IPO TO BE LAUNCHED
ON
8-MAY-2017
PRICE BAND RS.56-60, DISCOUNT RS.2
Housing and Urban Development Corporation Limited (HUDCO), a Miniratna
(Category-I Public Sector Enterprise) company of the Government of India is
going to raise funds through the way of Initial Public Offerings (IPO).
State-run
Housing and Urban Development Corporation (HUDCO) has decided to launch its
initial public offering on May 8 and set a price band at Rs 56-60 per share.
The
IPO comprised sale of 20 crore equity shares (10 percent paid-up capital) by
the central government through an offer for sale (OFS).
The
issue will close on May 11 and anchor investors' portion will open for
subscription on May 5.
The
company aims to raise Rs 1,121 crore at lower end of price band and Rs 1,201.1
crore at higher end of price band.
HUDCO IPO
details
|
|
Subscription Dates
|
8 - 11 May 2017
|
Price Band
|
INR56 - 60 per share
|
Fresh issue
|
Nil
|
Offer For Sale
|
204,058,747 shares (INR1,224.3 crore)
|
Total IPO size
|
204,058,747 shares (INR1,224.3 crore)
|
Minimum bid (lot size)
|
200 shares
|
Face Value
|
INR10 per share
|
Retail Allocation
|
35%
|
Listing On
|
NSE, BSE
|
HUDCO IPO – Schedule
05th May : Anchor Investors subscription
08th May – Offer Opens
10th May – Bank Holiday for Buddha Pournima
11th May – Offer Closes
17th May – Finalisation of Basis of Allotment
18th May – Unblocking of ASBA
19th May – Credit to Demat Accounts
19th May – Listing on NSE & BSE
The Housing and Urban Development Corporation Limited (HUDCO) has more than 46 years’ experience in providing loans for housing and urban infrastructure projects in India. The Miniratna company’s total outstanding loan portfolio was INR361,119.3 million as of September 30, 2016. Out of this, INR112,951.1 million, or 31.28%, were for Housing Finance loans and INR248,168.2 million, or 68.72%, were Urban Infrastructure Finance loans and project-linked bonds.
HUDCO
classifies its housing finance loans into social housing, residential real
estate and retail finance, which is branded as HUDCO Niwas. Under social
housing, the ultimate beneficiaries of the loans are borrowers belonging to the
economically weaker sections (EWS) of the society, which is defined as families
with household income of INR300,000 per annum or less, and borrowers belonging
to the lower income group (LIG), which is defined as families with household
income from INR300,001 per annum to INR600,000 per annum. Under residential
real estate, the ultimate beneficiaries of the loans are public and private
sector borrowers for housing and commercial real estate projects, including
land acquisition. Such housing and commercial real estate projects cater
primarily to the middle-income group and high-income group of society.
Under urban
infrastructure finance, HUDCO makes loans for projects relating to water
supply, roads and transport, power, emerging sectors, which includes SEZs
(special economic zones), industrial infrastructure, gas pipelines, oil
terminals and telecom sector projects, commercial infrastructure which includes
shopping centres, market complexes, malls-cum-multiplexes, hotels and office
buildings, social infrastructure and area development, and sewerage, drainage
and solid waste management. HUDCO’s borrowers under Urban Infrastructure
Finance are primarily State Governments and their agencies. It ceased
sanctioning new Urban Infrastructure Finance loans to entities in the private
sector in March 2013.
Promoters
of HUDCO: The President of
India
The
President of India as promoter
HUDCO is promoted by the President of India who also owns all
shares in the company (2,001,899,300 directly and 700 through its nominees).
The President acts through the Ministry of Housing and Urban Poverty Alleviation,
Government of India, the Ministry of Rural Development, Government of India and
the Ministry of Urban Development, Government of India.
In other words, the government of India has full control of the
company. Since the company is totally owned by the President of India, there
are no external investors. This is understandable as HUDCO is a PSU. Directly
or indirectly through various ministries or departments, the government
owns PSUs.
Solid Financial Performance
HUDCO boasts of
strong financial performance including consistently increasing revenues and
strong profitability. The company’s top-line has increased in each of the last
four years and looks on track of doing an encore this year as well. Similarly,
its proven business model means profits have remained strong and have followed
a growth trajectory in the timeframe.
HUDCO’s sustained performance and profitability earned it the
Miniratna status in fiscal 2005. While its earnings
have improved, profitability has slipped a bit in the latest six months.
Nevertheless, net profit margin at 19.9% is still quite strong for a company of
this size.
HUDCO’s consolidated financial performance (in INR
crore)
|
||||||
FY2012
|
FY2013
|
FY2014
|
FY2015
|
FY2016
|
6M FY2017
|
|
Total revenue
|
2,778.6
|
2,921.3
|
3,002.9
|
3,427.8
|
3,302.2
|
1,748.2
|
Total expenses
|
1,838.9
|
1,880.6
|
1,877.8
|
2,258.0
|
2,230.6
|
1,228.3
|
Profit after tax
|
621.6
|
699.7
|
734.0
|
768.3
|
774.3
|
348.2
|
Net margin (%)
|
22.4
|
24.0
|
24.4
|
22.4
|
23.4
|
19.9
|
HUDCO IPO will be a darling of dividend investors
Being a profitable
PSU, HUDCO pays regular dividend and this is something retail investors will
find attractive. The company is required to pay a minimal annual dividend of 30% of its profit
after tax (PAT) or 5% of its net worth, whichever is higher.
Although this was not maintained in the latest financial year, the dividend
rate of 5% was still quite attractive. Even after the IPO, the government will
remain the biggest shareholder which means there is no reason to believe that
this dividend policy will change.
Increasing urbanization means outlook bright for HUDCO
Everyone keeping
eyes and ears open knows that urban India is witnessing a massive inflow of
working population from rural parts of the country, but here are some
statistics. India’s urban population increased from 222 million in 1990 to 410
million in 2014 and is expected to reach 814 million by 2050. More importantly,
the figure in 1990 made 26% of India’s population but increased to 32% in 2014. Going by the forecasts, half of India is
expected to live in cities by 2050. Coming from our low base, this may
appear a drastic change but India ranks pretty low in urbanization. According
to data from the government of India and World Economic Forum (WEF), China
(54%), Indonesia (53%), Mexico (79%), Brazil (85%) and Russia (74%) are much
ahead of India in terms of urbanization rates.
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