Shares of state-owned Housing and Urban Development Corporation (HUDCO) made a strong debut on stock exchanges today. HUDCO’s shares surged as much as 30% to Rs. 77.85 on National Stock Exchange compared to its issue cost of Rs. 60. Experts were expecting a strong listing for HUDCO shares post an overwhelming response to its initial public offer (IPO), which was simply an offer available to be purchased by the government of India. HUDCO’s IPO was subscribed about 80%. The Qualified Institutional Buyers segment was subscribed more than 55 times with around 38% request from Foreign Institutional Investors (FIIs). Non-institutional category was subscribed more than 330 times and the retail category also saw a strong demand of more than 10 times.
The Rs. 1,200 crore initial public offer of HUDCO got bids worth Rs. 97,000 crore, thereby recording the highest oversubscription in any PSU disinvestment, the government had said before.
HUDCO primarily lends to urban infrastructure projects relating to water supply, roads and transport and power accounting for 69% of the loan book. It also lends towards housing finance, which forms the balance 31% of the loan book. Both the segments have vast untapped opportunity in India, which would give potential growth chance to HUDCO to scale up its operations, Angel Broking said in a note.
Meanwhile, HUDCO will play a major part in Prime Minister Narendra Modi’s Pradhan Mantri Awas Yojana scheme, which aims to give subsidised housing loans to middle and income group, analysts say.
HUDCO had announced a net profit of Rs. 496 crore on net interest income (NII) of Rs. 1,104 crore for the first nine months of last fiscal. At the issue cost of Rs. 60, HUDCO shares were esteemed at 1.35 times its FY2017 evaluated book value, which is a reasonable valuation, said Angel Broking.
As of 10.06 am, HUDCO shares traded 27.5% higher at Rs. 76.5.