Hudco shares soar 20% on Street debut

MUMBAI: Shares of Housing and Urban Development Corporation (Hudco) made a strong debut on the bourses on Friday, ending up 20.8% over the issue price at Rs 72.50 on the BSE after opening at a premium of 22.4% earlier in the day. The stock opened at Rs 73.45 and touched a high of Rs 77.80 during the session.

The strong debut comes after the state-owned firm's Rs 1,224-crore initial public offering, priced in a band of Rs 56-60 per share, got subscribed 79.5 times last week helped by strong interest from high net-worth individuals. The portion reserved for HNIs got subscribed over 330 times, while the qualified institutional buyers' segment got subscribed more than 55 times.

The retail investor segment, which got a discount of Rs 2 on the offer price, got subscribed 10.6 times. The IPO got over 20 lakh applications, which was higher than the D-Mart IPO, which got close to 19 lakh applications. It was also the highest number of applications received in an IPO where the government is divesting stake.

Most brokerages including Geojit, Choice Broking, IIFL, Angel Broking and Antique Stock Broking had given a subscribe rating to the issue before the IPO, partly due to its attractive valuations. At the current market price, the stock trades at about 1.8 times adjusted book value.Analysts expect more gains in the near term.



“The book value of most housing finance companies is above 2 and Hudco is at the lower end of the valuation range for housing finance firms,“ said G Chokkalingam, founder, Equinomics Research and Advisory . Chokkalingam expects an upside of 10% in the stock from current levels. Nomura, IDBI Capital Markets, SBI Capital Markets and ICICI Securities were the book running lead managers to the issue.

Hudco, which is a `Miniratna' firm, provides loans for housing and urban infrastructure projects in India. It is the first government-owned company to go public after National Buildings Construction Corporation in March 2012. The government divested 10.2% stake in Hudco through the IPO as part of its divestment programme for FY18.