Here are the Research Reviews & Recommendations of the
HUDCO Ltd IPO Antique Stock Broking has the following View on the IPO
Given the limited appraisal skills, HUDCO witnessed huge NPAs in its private sector portfolio. While it has stopped lending to this segment since 2013, re-starting it could be a risk. ALM mismatch and governmental disposition on allowing HUDCO to raise tax free bonds could result in margin volatility in the future. At the upper price band of Rs60 per share, the stock trades at 1.0x FY19e book. While comon with HFCs is absolutely unwarranted due to the fact that HUDCO doesn't lend directly to the home buyer, IPO valuations leave some upside for investors.
Dalal & Broacha are NEUTRAL on Hudco IPO
Reported Gross NPA and Net NPA ratio are at 6.8% and 1.5%, respectively, with healthy coverage ratio of 79%. As per the disclosures provided in the offer document, there are two accounts which are under litigation not classified as NPAs. If classified, the Gross NPA and Net NPA ratio can deteriorate to 9.1% and 3.6%, respectively. At the higher end of the price band of the IPO, the valuation works out to 1.6x on P/ABV (i.e. after taking into account net NPA of 3.6%). NII growth of the company during FY12-16 is 5.5% and Net profit has grown at 6.9% during same period.
IIFL Analysts have the following recommendation on the Public Issue of HUDCO Ltd
Given the reasonable validity for steady asset growth and better returns ratios, the IPO valuation at 1.5x FY17 P/ABV seems attractive. We recommend subscribe to the issue.
Gupta Equities has the following review,
Housing and Urban Development Corporation Ltd (HUDCO) stands to gain from operating leverage and also rise in the business. At a P/E of 15.4x we believe that HUDCO at discount as compared to its domestic peers. We assign a Subscribe rating to the IPO.
ICICI Securities Analysts Kajal Gandhi, Vishal Narnolia and Vasant Lohiya have the following recommendation,
At the IPO price band of | 56-60, the stock is available at a multiple of 1.4x 9MFY17 ABV (post issue) at the upper end of the price band. Post issue market capitalisation is at ~| 12011 crore.
Geojit Securities has the following Rating,
At the upper price band, i.e. Rs60, the stock is available post-issue Adj P/BV multiple of 1.4x 9MFY17 which is attractive given its unique business model with presence in housing finance as well as urban infrastructure development. Valuation is also at a much reasonable discount to its peers, when considered on the post issue book value. Hence, we recommend ‘SUBSCRIBE’ to the issue, with a medium-to-long term perspective.
Joindre Capital Analyst Mr. Avinash Gorakshakar has the following view,
Given the reasonable visibility for steady asset growth and better return ratios, the IPO valuation at 1.4-1.5x 9M FY17 P/ABV seems attractive. We recommend Subscribe. Hence looking at the long term prospects we recommend a SUBSCRIBE for HUDCO.
SPA Financial Advisors said,
Company has very high capital adequacy ratio of ~65%, all of which is Tier I capital. 67% of total Loan Portfolio, is guaranteed by State Governments. Current leverage position at 3x provides enough room for future lending growth. At the issue price the valuation is 1.4x P/BV on FY16 numbers which is fair given the low leverage ratios and adequate PCR, hence we recommend to SUBSCRIBE to the issue as a good long term investment.
