HUDCO - Housing &Urban Development Corporation Ltd. Share Price

Question 1: What would be the risk evaluation and underwriting criteria for assessing private loans, and what is the loan growth guidance?

Answer 1: Regarding private sector underwriting, we will follow best practices to ensure asset quality, starting with assessing project bankability and entity investment grade. We will use a two-step grading approach for appraisal and a three-step for monitoring, supported by external consultants initially. As for loan growth, I maintain a guidance of 25% to 30%. The addition of private sector and urban invest window products will act as catalysts for our growth.

Question 2: What is the status of outstanding sanctions that could convert into disbursements?

Answer 2: We currently have outstanding MOUs of approximately INR 7 lakh to INR 8 lakh crores. Documented schemes are around INR 2 lakh crores, with an additional INR 1 lakh crores in non-documented schemes. Therefore, we have a clear pipeline totaling around INR 3 lakh crores, with about INR 2 lakh crores already documented, while the remaining is in various stages of agreement discussions.

Question 3: How do you foresee the margins improving over the next quarters?

Answer 3: I'm optimistic about maintaining our profitability metrics with around 2% spread and 3% NIM. Although fluctuations in international markets impacted our NIMs, I believe we will see improvements as loan book growth continues. In Q3, I anticipate that we will surpass 3.1% NIM due to our strategies and potential rate cuts expected in the December monetary policy.

Question 4: With the significant forex fluctuations, how are your borrowings affected?

Answer 4: We have two types of foreign currency borrowings: FCNR loans maturing up to 1 year and external commercial borrowings with 5-year maturities. While our ECs have sufficient protections in place, our FCNR loans have seen some volatility. We've booked around INR 176 crores in losses due to this but expect the majority of these obligations to mature by February or March, reducing future exposure significantly.

Question 5: What is your stance on maintaining debt-to-equity levels as growth progresses?

Answer 5: Our current debt-equity ratio stands below 7%. We plan to maintain this around 8% while adhering to external borrowing covenants. We are exploring options for perpetual debt but not urgently. This level allows us to finance the expected growth while keeping leverage manageable.

Question 6: What specific growth targets do you have under the Urban Invest Window?

Answer 6: We target INR 1 lakh crores of state government funding as our business potential tied to the Urban Challenge Fund announced by the government. Additionally, INR 2 lakh crores will come from PPP players. We aim to sanction these funds within approximately 18 months, with further disbursement planned over the next 2-3 years, maintaining our spreads at current levels to ensure project viability.