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    H U D C O Q1 FY27 earnings call

    HUDCO
    Financial Services·28 Jul 2026
    Management Summary

    HUDCO reported a strong Q1 FY27, maintaining spreads and NIMs at 2% and 3% respectively, driven by a focus on bankable urban infrastructure projects. The company has a robust project pipeline, with INR2.5 lakh crores in sanctions outstanding and ambitious disbursement targets for FY27. While gross NPAs are over INR1,600 crores, management is actively working on resolutions, expecting significant recovery this financial year, and benefits from an attractive cost of debt.

    Highlights

    5

    • Spreads are expected to remain around 2% and NIMs around 3%, reflecting diligent project selection and cost management.

    • The company has a robust project pipeline with INR2.5 lakh crores in sanctions outstanding, including new MOUs worth over INR2 lakh crores with Gujarat and Bihar.

    • HUDCO targets INR65,000 crores in disbursements for FY27 and a loan book of INR3 lakh crores by 2030.

    • The cost of debt is attractive at 5.5% to 6.5%, aided by the RBI forex window which covers most hedging costs.

    • Management is confident in resolving INR1,100 crores of NPAs currently in NCLT during the current financial year.

    Concerns

    2

    • Project execution can face delays due to factors like land acquisition, social, and political issues, impacting disbursement timelines.

    • Gross NPA stands at over INR1,600 crores, though net NPA is significantly lower at INR82 crores, and resolution efforts are underway.

    Key financials

    Single quarter

    06 metrics
    1. 01Spreads2%
    2. 02NIMs3%
    3. 03Gross NPA₹1,600 Cr
    4. 04Net NPA₹82 Cr
    5. 05Yield on Loans8.7%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    Cost 5.5%

    Guidance & targets

    8
    CategoryTargetPriority
    Profitability
    Spreads
    around 2%
    		High
    Profitability
    NIMs
    around 3%
    		High
    Disbursement
    Disbursement
    around INR65,000 crores
    		High
    Loan Book
    Loan Book
    INR3 lakh crores
    		High
    Repayment
    Total Repayment
    approx. 20,000
    		High
    Repayment
    Remaining Repayment
    INR15,000 crores to INR16,000 crores
    		High
    Forex Tie-up
    Minimum Forex Tie-up
    USD2 billion
    		High
    Asset Quality
    NPA Resolution
    most of this part will be resolved
    		Medium

    What to watch in Q2 FY27

    5

    Spreads and NIMs

    next quarter
    CurrentSpreads ~2%, NIMs ~3%
    TargetMaintenance of ~2% spreads and ~3% NIMs

    Why it matters

    These are key profitability indicators, and their stability is crucial for financial performance.

    I think it is very relevant, but it is a continual kind of statement that I can make that our spreads will remain around 2% and our NIMs will be around 3%.

    Risks & concerns

    2
    RiskSeverity

    Project execution delays

    Large projects can be delayed by land acquisition, social, and political issues, impacting disbursement timelines. — Management acknowledged

    medium

    NPA resolution timeline

    INR1,100 crores of gross NPAs are in NCLT, with resolution expected this financial year, but subject to legal processes. — Management acknowledged

    medium

    Q&A highlights

    8

    “No, no. It's not short term. It's a 5-year loan. Since RBI has changed with the window that if you are raising dollar-denominated loans for 5 years, RBI is also taking care of part hedging costs, and we have to take only 1.5% of the hedging costs.”

    Clarifies that HUDCO's foreign currency exposure is long-term and largely hedged by RBI, mitigating currency risk.

    asked by Vijay Singh

    2 min read6 chapters

    Detailed Narrative

    01

    Focus on Urban Infrastructure and Viksit Bharat

    HUDCO is actively aligning with the 'Viksit Bharat' vision, focusing on capital-intensive urban infrastructure projects. The company identifies significant potential in areas like Ring Roads, multi-sector infrastructure, and multi-modal corridors, driven by government policies and a shift towards bankable projects. This strategic focus is expected to create substantial business opportunities for HUDCO, leveraging its sector-agnostic approach to urban development.

    02

    MOUs and Project Pipeline

    HUDCO has signed significant MOUs with state governments, including Gujarat and Bihar, totaling over INR2 lakh crores, adding to an existing pipeline of INR7-8 lakh crores. These agreements cover diverse projects such as metro systems, RRTS, new satellite towns, and urban infrastructure. Management anticipates that initial projects under these MOUs will commence from next month, with disbursements expected over a 5-year period, underscoring a strong future growth trajectory.

    03

    Financial Performance and Spreads

    The company aims to maintain its spreads at approximately 2% and Net Interest Margins (NIMs) around 3%. The current yield on loans stands at about 8.7%, supported by a cost of debt ranging between 5.5% and 6.5%. This stability is attributed to HUDCO's diligent project selection, focusing on bankable projects, and continuous efforts to optimize its cost of funds.

    04

    Borrowing Strategy and Cost of Funds

    HUDCO's borrowing strategy is predominantly domestic, with over 70% sourced from domestic loans and bonds (40% bonds, 30% bank loans). Approximately 10% of its borrowings are from ECBs, including USD700 million already drawn under an RBI forex window, with a total tie-up of USD2 billion. The RBI window significantly reduces hedging costs, limiting HUDCO's exposure to just 1.5%, contributing to an attractive overall cost of debt.

    05

    Asset Quality and NPA Resolution

    HUDCO reported a gross NPA of slightly over INR1,600 crores and a net NPA of approximately INR82 crores. A substantial portion, INR1,100 crores, is currently in various stages of resolution within the NCLT, with management expressing confidence that most of these assets will be resolved during the current financial year. The company is actively engaging with promoters to facilitate these resolutions, aiming for a near-zero net NPA position.

    06

    Growth Targets and Outlook

    For FY27, HUDCO has set a disbursement target of around INR65,000 crores, building on a strong project pipeline with INR2.5 lakh crores in sanctions outstanding. The company also projects achieving a loan book of INR3 lakh crores by 2030. The effective tax rate for the quarter was 20.61%, benefiting from a policy change regarding deferred tax liability on special reserves.

    This is an AI-generated summary of a publicly available earnings call transcript.