HUDCO IPO: Brokerage Views & Run up to IPO

This post on HUDCO IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on HUDCO IPO and shall be updated continuously till the closure of the issue. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to HUDCO IPO or not.

Related Posts: HUDCO IPO Review

HUDCO IPO : Subscription etc.  
Subscription: HUDCO  IPO  ( x times)
  QIB NII Retail Total
Day 3(approx) 55.1 x 330 x 10.78 x 79.5x
Day 2 . 2.96 x .94 x 4.13 x 3.01 x
Day 1 0.18 x 0.16 x 1.52 x 0.63 x

HUDCO IPO :Grey Market Premium etc.

08/05/17 Grey Market Premium Rs. 28/-  Kostak (Appl. Form) Rs. 1100/-
05/05/17 Grey Market Premium Rs. 20-21/-  Kostak (Appl. Form) Rs. 1000/-

Consolidated Views of Brokerages, Analysts, Business New Paper Reports, Management Views on HUDCO IPO.

Ajcon Global: “At the upper end of the price band of Rs. 60, the IPO is valued at 1.3x at FY17E post issue Book Value which is cheap. There are no direct listed peers when the Company is considered as a whole as it is catering mainly to state governments for housing and infrastructure projects. With due consideration to factors like a) HUDCO’s key role in various Government’s schemes to develop the Indian housing and urban infrastructure sectors, b) highest credit ratings, access to diversified and lower-cost funding and ability to significantly increase the borrowings in compliance with HFC directions, c)established track record, profitable since inception and a strong financial position, d)lending to state agencies with zero default risk, e) pan – India presence and strong relationships with State governments and their agencies, e) decent asset growth with strong RoA of 2.3 percent augurs well for the Company, we recommend “SUBSCRIBE” to the issue.  

Centrum: ““At the higher end of the price band of Rs 60, the stock is valued at 1.6x its FY16 adjusted book value (ABV). The valuation appears attractive, given the good fundamentals and highest credit rating of ‘AAA’”

SMC : “
At upper price band of Rs.60, EPS and P/E of FY2017 are Rs. 3.31and 18.13 multiple respectively and at a lower price band of Rs. 56, P/E multiple is 16.92; at upper price band of Rs.60 , book value and P/B of FY2017 are Rs.45.63 and 1.31 multiple respectively and at a lower price band of Rs. 56, P/B multiple is 1.23. No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital. Outlook The Company is set to play a significant role in PMAY under Housing for All (HFA) by 2022 and thus the outlook of the company looks bright. Moreover, it enjoys AAA rating for its debt plans from rating agencies like CARE and ICRA. With Pan India presence, company is set to explore growth potentials. Investors with long term horizon may consider for investment”

Spa Securities:”The company has very high capital adequacy ratio of 65 percent, all of which is Tier I capital. 67 percent of total loan portfolio is guaranteed by state governments.Current leverage position at 3 times provides enough room for future lending growth,” it said in the report. At the issue price, the valuation is fair, given the low leverage ratios and adequate PCR.”

Angel Broking: “Outlook Valuation: HUDCO has a unique blend of business with focus on financing both housing and urban infrastructure, which has vast untapped opportunity in India. Focus on Govt. sponsored projects and ability to raise funds at a competitive price provides earnings visibility for many years. At the issue price band of `56-60, the stock is offered at 1.25x-1.35x its 9MFY2017 BV, which we believe is reasonably priced, and hence, recommend SUBSCRIBE to the issue.”

Capital Market: “Score: 42/100, Hudco is focused on loans to state governments and their agencies. The institution’s growth and NPA track record is not exciting. P/BV for Hudco works out to 1.34 times and P/Adj BV at 1.43 times at the upper price band. There are no comparable listed companies in India engaged in the same line of business as the company. However, among the comparable PSU lenders in the infrastructure space, Rural Electrification Corporation (REC) is trading at P/BV of 1.3 times and Power Finance Corporation is trading at P/BV of 1 times. Hudco is offered at a P/E of 18.2 times (annualized 9M FY2017 EPS). Among the comparable PSU lenders, REC trades at P/E of 6.1 times and PFC at 5.7 times (annualized 9M FY2017 EPS)”

GEPL Capital:Housing and Urban Development Corporation Ltd (HUDCO) stands to gain from operating leverage and also rise in the business. At a P/E of 15.4x we believe that HUDCO at discount as compared to its domestic peers. We assign a Subscribe rating to the IPO.”

Reliance Securities: “The company is not directly comparable to any listed NBFCs as it is primarily engaged in wholesale funding compared to retail lending by the latter. Expects HUDCO to deliver a healthy performance due to the growth opportunity in housing and urban infrastructure. “It provides favourable investment opportunity for long term investors with attractive valuations. Further, discount of Rs2/- share to the retail investors acts as an additional sweetener.”

LKP Research: “The HUDCO IPO, valued as 1.25X price to book value in its upper price band, is kickstarting the Centre’s disinvestment programme for FY18 in order to raise funds & unlock value. We believe that there the IPO is attractively priced considering its long standing relationships with state governments, comfortable NIM & debt position, ability to raise funds from a wide variety of institutional & non institutional sources, healthy asset quality & prudent approach. We thereby recommend a SUBSCRIBE on the HUDCO IPO.”

IIFL:  “Growth opportunity for HUDCO enhancing significantly, thereby enabling the company to swell its loan assets faster than its historical pace. “The loan spread is expected to remain steady at 2-2.2 percent over the longer term, although there could be intermittent volatility due to higher share of floating rate assets. Going forward, it terms the company being substantially capitalized and commanding the highest credit rating. With this, it can raise long term money at the best possible rates from the bond market, it added. “Consequently, credit cost may come-off in the coming years augmenting the franchise profitability. Given the reasonable visibility for steady asset growth and better return ratios, the IPO valuation seems attractive.”

Economic Times: “Housing push, attractive price make Hudco IPO a good bet. Click Here for complete Article

Ashika Research: “HUDCO is available at 1.3x P/B value at its upper price band. HUDCO IPO is attractively priced considering its long standing relationships with state governments, comfortable NIM & debt position, ability to raise funds from a wide variety of institutional & non institutional sources, healthy asset quality & prudent approach. We thereby recommend a SUBSCRIBE on HUDCO IPO from a long term perspective.” “Govt. backed lender extending loans to state agencies, where risk of default is near-zero, with adequate capital backing, good quality book and very strong sector tailwinds, is being offered at a price-to-book value multiple of only 1.2 times, which is indeed a no brainer. Retail discount of Rs. 2 per share, seen after a long times, only acts as an additional sweetener. Very attractive pricing supported by domestic housing boom make this issue a subscribe both from listing gains and long term perspective. Share also hold promise to touch the 3-digit figure over the next 12 months.”

BMA Wealth Creators: “At the upper band of the issue price the stock is valued at a PE of 17 for FY17 profits. The book value stands at Rs 42. Thus its Price to Book Value stands at 1.4. There is no direct listed peer of the co. But housing finance companies like LIC Housing, HDFC etc are trading around 2.5 times their book value. Again, retail investors will be getting further discount to the issue price. Thus there is enough on table for investors.”

Leave a Reply