Hudco may raise $1 billion via ECB route in FY25

New Delhi: State-run Housing & Urban Development Corporation Ltd (HUDCO) plans to raise as much as $1 billion through external commercial borrowing (ECB) in the current financial year (FY25), said two people in the know of the developments.

It would be part of its projected overall borrowing of ₹35,000 crore ($4.17 billion) in this financial year. Recently, the company tied up a yen-denominated loan worth around $400 million, they said.

“HUDCO is looking at a borrowing of up to $1 billion through the ECB route. About $400 million has been signed up for and the rest about $600 million may be raised in the third and fourth quarters,” said one of the persons mentioned above, adding that the company is looking at reducing the cost of funds through diverse sources, including Foreign Currency Non-Resident Account (FCNR), ECB and bonds.

The increased foreign currency borrowing comes at a time when the government has announced plans to build an additional 30 million affordable homes under the Pradhan Mantri Awas Yojana (PMAY) scheme. It would include the second phase of PMAY (Urban) scheme for 10 million houses.

The government has foresees a spending of ₹10 trillion under 'PMAY (Urban) 2.0', out of which ₹2.2 trillion would be provided by the Centre and the remaining ₹7.8 trillion by states. A significant part of the ₹7.8 trillion is expected to be financed by HUDCO.

In response to a query from Mint, a HUDCO spokesperson confirmed the development and said: “HUDCO may look at raising up to $1 billion through ECB, part of which would be yen-denominated. So far, the company has already tied up about $400 million in the current fiscal through this route.”

In its investor presentation for Q4FY24 (January-March), the company noted that in the last financial year (FY24) it went for a "judicious mix of borrowings through various available modes/sources resulting in reduction of overall cost of borrowings and adding competitive edge in lending operations".

HUDCO executed its maiden yen-denominated borrowing last year (FY24), of 15 billion Japanese Yen ( ₹828 crore) for a tenor of five years at 5.29%, showed its investor presentation. Another $480 million was borrowed as a FCNR loan last fiscal.

It raised a total of ₹21,975.13 crore in the last fiscal, which it is looking at increasing to ₹30,000 crore in the ongoing financial year through banks, FCNR loans, foreign currency loans, bonds, said the second person mentioned above.

The company which was accorded the Navratna status in April, has a diversified presence across infrastructure financing and consultancy services.

In the lending space, apart from affordable housing, it also finances roads and urban mobility projects, social infrastructure including hospitals and government buildings, water supply, sewerage and solid waste management projects along with projects in the renewable energy space.

In FY24, out of its loan portfolio, ₹49,365 crore went towards affordable housing while ₹43,289 crore was lent towards urban infrastructure.

In the consultancy space, it is present in architectural, landscape and regional planning, appraisal and monitoring of government projects, environmental studies, town planning and asset monetization.

On Tuesday, the company signed a non-binding memorandum of understanding (MoU) with another state-run company RITES Limited (RITES), to undertake comprehensive range of consultancy services from concept to commissioning in identified sectors wherein HUDCO shall extend its Project Management Consultancy Services for projects being implemented by RITES and shall also provide term-lending for various specified infrastructure projects, where consultancy services are undertaken by RITES.

Further, RITES would provide consultancy expertise, whenever required by HUDCO, in the projects being financed by HUDCO or where consultancy support being provided by HUDCO. Apart from PMAY, the company finances projects in other schemes including Smart Cities Mission and AMRUT and Jal Jeevan Mission.

Its total income in FY24 was ₹7,948.10 crore, with a 12% year-on-year increase and its net profit rose 24% to ₹2,116.74 crore during the same period.

Shares of HUDCO closed at ₹289.25 on the BSE on Thursday, lower by 3.08% from its previous close.