Hudco shares close 21% up in stock market debut after IPO
Shares of Housing and Urban Development Corp. Ltd (Hudco) made a stellar stock market debut on Friday, closing the day with a 20.8% gain at Rs72.50 apiece on BSE.
The stock opened at Rs73.45, a premium of 22.4% over the issue price of Rs60. During the day, it touched a high of Rs77.80 and a low of Rs70.55.
The benchmark BSE Sensex ended at 30,464.92 points, up 0.1% while the National Stock Exchange’s Nifty closed at 9,427.90 points, down 0.02%.
The state-owned company, which provides wholesale funding and loans for housing and urban infrastructure projects, has a market valuation of Rs1,479.43 crore.
The issue which was open during 8-11 May, was subscribed nearly 80 times, with the price band at Rs56-60 a share. The government aimed to sell 10.19% stake in the firm as part of its divestment plans.
The portion reserved for qualified institutional buyers was subscribed 55.45 times, while non-institutional investors saw a subscription of 330.36 times and the retail investors’ category was subscribed about 11 times.
Out of its total loan portfolio of around Rs36,386 crore, 89.93% was extended to state governments and their agencies as of 31 December 2016.
Urban infrastructure projects relating to water supply, roads, transport and power account for 69% of Hudco’s loan book. The balance 31% goes to housing finance.
Hudco reported gross non-performing assets (NPAs) and net NPAs of 6.8% 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 for private sector NPAs and stopped lending to them from FY13, 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.