HUDCO Plans ₹65,000 Crore Fundraising and Higher Borrowing Limit

The Housing and Urban Development Corporation (HUDCO) is set to hold a board meeting on April 4 to discuss a significant borrowing plan of ₹65,000 crore for the financial year 2025-26 (FY26). Additionally, the board will consider increasing the overall borrowing limit from ₹1.5 lakh crore to ₹2.5 lakh crore, according to the company’s exchange filing on March 28.

Stock Reaction and Market Response

Following the announcement, HUDCO shares surged nearly 2% but later pared gains. The stock has seen a strong rebound in recent weeks, rising 23% in the past month, recovering from its 52-week low of ₹159 per share on March 3.

HUDCO's Borrowing Strategy for Growth

HUDCO's expansion in its borrowing limits aligns with its increasing financial needs due to the rising demand for urban infrastructure financing. During its December quarter earnings update, the company had already revised its FY25 borrowing target from ₹40,000 crore to ₹55,000 crore, citing a "quantum jump in business."

₹2,000 Crore Raised Through NCDs

Ahead of this planned borrowing expansion, HUDCO recently raised ₹2,000 crore via non-convertible debentures (NCDs) at a coupon rate of 7.19%. The bonds, issued as "Unsecured, Taxable, Redeemable, Non-Convertible, Non-Cumulative NCDs", were allotted in a private placement on March 27, 2024.

HUDCO’s Strong Financial Performance

HUDCO has shown robust financial growth, backed by strong demand in the urban development and infrastructure sector:

• 42% YoY increase in net profit, reaching ₹735 crore in Q3 FY25.

• 37% YoY rise in revenue, touching ₹2,760 crore in the December quarter.

• Paid an interim dividend of ₹2.05 per equity share earlier this year.

Future Growth Outlook

HUDCO’s aggressive borrowing strategy indicates strong expansion plans. With an increased borrowing capacity, the company is expected to:

• Expand its urban infrastructure financing projects.

• Increase lending to housing and urban development sectors.

• Strengthen its financial position in the growing real estate and infrastructure market.

Conclusion

As HUDCO prepares for its crucial board meeting on April 4, investors will closely watch for decisions on the ₹65,000 crore borrowing plan and expansion of borrowing limits. With a strong financial performance, ongoing capital-raising strategies, and a recovering stock price, HUDCO remains a key player in India's urban infrastructure sector.

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