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Informist, Monday, Jan. 20, 2025

NEW DELHI – Housing and Urban Development Co. Ltd. is seen posting a solid increase in its net profit for the quarter ended December on the back of robust growth in loans and net interest income. While the company's bottom line for Oct-Dec may be lower compared to Jul-Sept, analysts are not perturbed, with Elara Securities (India) Pvt Ltd saying in a pre-earnings report that the net profit figure might look "optically low due to high profits in previous quarters due to write-backs".

HUDCO, which will announce its quarterly results on Wednesday, is seen reporting a net profit in the range of INR 5.89 billion to INR 6.32 billion for Oct-Dec, with Sharekhan Ltd estimating the former and Elara Securities and Nirmal Bang Equities Pvt Ltd the latter. At INR 6.18 billion, the average of the three estimates would be 19.0% higher on a year-on-year basis but 10.3% lower from Jul-Sept.

All three brokerages see HUDCO's loans up 37% year-on-year as on Dec. 31. Consequently, the average of the three brokerages' estimates for net interest income--which were in the range of INR 8.32 billion and INR 8.70 billion--was up 27.1% on year at INR 8.48 billion.

As at the end of September, HUDCO's outstanding loans stood at INR 1.11 trillion, up 36% on year.

According to Nirmal Bang Equities, Oct-Dec is expected to be "a strong quarter" for HUDCO, with "robust sanctions pipeline and disbursements" in housing and urban infrastructure segments, improving margins, and benign credit costs. Nirmal Bang sees HUDCO's net interest margin for the quarter at 3.1%, down 15 basis points from last year but up 11 bps from the previous quarter primarily due to disbursals being back-ended in Jul-Sept. Elara Securities is less optimistic, seeing margins broadly stable from Jul-Sept at 2.9%, down 28 bps from a year ago.

Nirmal Bang and Elara Securities both have a 'buy' rating on HUDCO, with a target price of INR 289 and INR 361, respectively. Shares of HUDCO were trading 1.5% higher at INR 236.30 at 1225 IST on the National Stock Exchange.

On the asset quality front, Elara Securities expects HUDCO to report better numbers for Oct-Dec, while Sharekhan--which has a positive recommendation with a target price of INR 350--said the company's commentary on credit costs would be monitored.

Following are the Oct-Dec earnings estimates for HUDCO based on reports from three brokerage firms in descending order of the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Siddharth Upasani

Edited by Avishek Dutta

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