Q1 2027 Housing and Urban Development Corporation Ltd Earnings Call Transcript
Key Points
- Housing & Urban Development Corp Ltd (NSE:HUDCO) has a robust sanction pipeline of approximately INR 2.5 lakh crore, providing strong visibility for future disbursements.
- The company is capitalizing on the RBI's favorable Forex window, securing long-term ECB loans at an attractive all-in cost of 5.5%-6.5%, which will help reduce the overall cost of funds.
- Management has guided for a strong FY27 disbursement target of INR 65,000 crore, up from INR 52,000 crore in the previous year, indicating significant growth momentum.
- The company is expanding its footprint by signing large-scale MOUs with states like Gujarat and Bihar, opening up new avenues for financing major urban infrastructure projects.
- Asset quality is improving, with management expressing confidence in resolving most of the legacy NPAs (currently at ~INR 1,600 crore gross) during the current financial year, which could lead to write-backs.
- The company is diversifying its loan book by venturing into PPP project finance, with initial sanctions of INR 6,000-7,000 crore already made in Q1 FY27.
- The effective tax rate has decreased due to a change in policy regarding deferred tax liability on special reserves, boosting bottom-line profitability.
- The company's net interest margin (spread) has compressed to ~1.8%, and management expects it to stabilize at 2%, which is lower than historical levels.
- The large-scale MOUs signed with states are long-gestation projects (5+ years) with significant execution risks, including land acquisition and regulatory hurdles, making near-term disbursement uncertain.
- The company's housing finance portfolio is shrinking as states are not seeking counterpart funding under PMAY, reducing its presence in a core segment.
- Despite the strong pipeline, the company has not provided a specific growth target for FY28, creating some uncertainty about the sustainability of the current growth rate.
- The company's foray into private sector lending is cautious and without a defined target, as it prioritizes safety and stringent due diligence, which may limit the speed of growth in this segment.
- A significant portion of the legacy NPAs (around INR 1,100 crore) is tied up in NCLT proceedings, and the resolution timeline, while expected this year, remains subject to legal processes.
- The company's growth is heavily dependent on state government capex and policy initiatives, making it vulnerable to changes in government spending priorities.
Ladies and gentlemen, good day and welcome to Housing and Urban Development Corporation Limited Q1 FY27 post earnings conference call hosted by Dam Capital. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Sanket Chheda from Dam Capital Advisors. Thank you and over to you, sir.
Yeah, hi, very good morning to all of you. We have with us the entire management team of people to discuss the Q1 results. So from the management side, we have Mr. Sanjay Kulshrestha who is the Chairman and. MD, Mr. Nagaraja, who is the Director of Corporate Planning, Mr. Darjit Singh Pakri, who is the Director of Finance, and Mr. Ashal Gupta, who is the Executive Director of Finance at an IRO. Without further ado, I'll hand the call over to Mr. Sanjay, sir, for his open marks, follow the questions and answers. Over to you, sir.
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