HUDCO Reports 4% Increase in Q4 Profit and Plans Rs 65,000 Crore Borrowing for Fiscal Year 2026

State-run lender Housing and Urban Development Corporation (HUDCO) reported a 4% rise in its consolidated net profit for the March quarter, reaching Rs 727.74 crore. The company's total income for January-March 2024-25 increased to Rs 2,854.91 crore from Rs 2,194.04 crore in the same period last year, according to a regulatory filing.

Representative image

For the fiscal year 2024-25, HUDCO's net profit rose to Rs 2,709.14 crore from Rs 2,116.69 crore in the previous year. Chairman and Managing Director Sanjay Kulshrestha stated that the company aims for a 25% growth in its book for the new fiscal year and plans to increase its borrowing to Rs 65,000 crore.

Borrowing Strategy and Overseas Plans

HUDCO achieved a 35% loan growth in FY25, ending with borrowings of Rs 55,000 crore. Kulshrestha mentioned maintaining overseas borrowings at about one-fifth of total borrowings but hinted at possible changes in instruments used. The company is considering raising funds through bond sales overseas, particularly in Japan.

A senior official noted that bonds offer fixed coupons compared to loans' variable rates, prompting HUDCO to explore this new avenue. The company is also negotiating a USD 500 million-equivalent loan in Japanese Yen, aiming to complete it by September.

New Financial Instruments and Cost Management

HUDCO plans to raise up to Rs 1,000 crore via the 54EC route, marking its debut with this tax-exempt instrument. This funding option offers a lower interest rate of 5.45%, compared to the weighted cost of funds at 6.75%, with a five-year lock-in period.

The CMD revealed plans to issue a zero-coupon bond next month but did not specify pricing or amount details. For FY26, HUDCO's focus will be on reducing borrowing costs by managing financial instruments while maintaining net interest margins between 3.3% and 3.4%.

Asset Management and Market Performance

On Tuesday, HUDCO announced intentions to raise up to Rs 2,190 crore through debentures issuance. The company aims to eliminate net non-performing assets within the next 18 months. Kulshrestha highlighted no new slippages occurred in FY25 and stressed efforts on resolving legacy stressed assets via bankruptcy courts and settlements.

On Wednesday, HUDCO shares fell by 1.65%, closing at Rs 214.30 each on the BSE, while the benchmark index saw a slight gain of 0.13%.

With inputs from PTI