HUDCO made a fantastic debut today morning. As against the IPO price of Rs.60/share, it got listed at Rs.73.45 on the BSE , going up to Rs.77.80.

After the very muted listing of IRB InvIT Fund, this comes as a very pleasant surprise.

The IPO had got a great response, recording a subscription of 79 times, the highest ever recorded for any PSU issue. Of this, the lion’s share of subscription was from non-institutional investors or HNIs at 330.36 times, QIBs was at 55.45 times and retail investors at 11 times.

Wholly owned by the Indian Govt, HUDCO is a Miniratna (Category-I Public Sector Enterprise) long term lender (~8 years) to State Government agencies (90% of Rs. 36,386 crore loan portfolio, as of 31-12-16) and private sector entities (10%) towards urban infrastructure finance (69% of loan book) and housing (31% of loan book), with share of housing having increased from 26%, as of 31-3-14. Average ticket size of loans in both the categories is about Rs. 55 crore. Growth in financial performance has been in mid-single digit - revenue CAGR of 4.4% and PAT CAGR of 5.6% between FY12-16, albeit consistent.

In our IPO Analysis, we had said, “Very attractive pricing supported by domestic housing boom make this issue a subscribe both from listing gains and long term perspective. Share also hold promise to touch the 3-digit figure over the next 12 months.”