desk
Share
HUDCO shares: Brokerage firm Elara Securities has maintained its positive stance on government company Housing and Urban Development Corporation (HUDCO). After the September quarter results, the analyst has described this stock as "worth buying". According to Elara, HUDCO is now trading at attractive valuations, as the stock has fallen by about 40% from its recent top of Rs 353.
During the quarter, HUDCO's sanctions stood at Rs 62,375 crore, compared to Rs 14,097 crore sanctioned in the June quarter. Disbursements may have nearly tripled on a year-on-year basis, but declined 28.1% from the June quarter to Rs 9,074 crore. HUDCO's asset quality has improved sequentially, with gross NPAs declining to 2.04% from 2.42% in June, while net NPAs declined to 0.31% from 0.33% quarter-on-quarter.
What Elara wrote Elara has written in its note that it expects HUDCO's gross NPAs to decline to 1.5% by FY27. The management has also said that it expects to resolve its entire NPA portfolio by FY26. The brokerage also believes that although HUDCO has maintained its guidance of 3.2%-3.25% for its net interest margin (NIM), there is a possibility that the company could exceed its target; as it has a robust sanction pipeline, focused on high-yielding urban infra assets and judicial mixed borrowings. According to Elara, loan growth, positive guidance and continued improvement in asset quality are also reasons for the strong upside. Bad assets resolution As a result, Elara has raised HUDCO's earnings estimates for the fiscal year 2025-2026 by 7% and 3%, respectively, incorporating write-backs due to bad assets resolution. It expects HUDCO to demand a "shortage premium" and benefit the most from the government's thrust on housing and infrastructure. Elara Securities has a "buy" recommendation on HUDCO with a target price of Rs 361, implying a price to book of 2.7 times. HUDCO shares are currently trading 2.1% lower at Rs 214.74. The stock has gained 66% so far in 2024.
--Advertisement--
