Published on Friday, February 26, 2016 by Dilip Davda | Modified on Monday, July 8, 2019
Housing & Urban Development Corporation Ltd. (HUDCO) is a techno-financial institution engaged in the financing and promotion of housing and urban infrastructure projects throughout India. Hudco has a pan-India presence through wide network of zonal, regional and development offices and occupies a key position in the GoI's growth plans and implementation of its policies for the housing and urban infrastructure sector. The company is again coming out with a tax free bond issue offer to mobilize funds for its financing activities.
HUDCO is offering secured, redeemable non-convertible debentures having a face value of Rs. 1000 each. This tax free NCDs are bearing coupon rates of 7.04% and 7.39% for 10 yrs and 15 yrs respectively for other then retail category and 7.29% and 7.69% for 10 yrs and 15 yrs for retail category. The base size of this offer is Rs. 500 crore with an option to retain over subscription up to Rs. 1788.50 crore. Minimum application is to be made for 5 bonds and in multiple of 1 bond thereof, thereafter. These bonds are available under demat and physical mode, but trading will take place in demat mode only. The Net Issue Proceeds as raised through each of the Tranche are proposed to be utilized to finance the projects and/activities mainly relating to housing for EWS/ LIG categories during the current year and/over the years, and for such other purposes as may be permitted by Ministry of Finance, Government of India or any other authority, from time to time. 20% of total issue quota is reserved for QIBs, Corporates and HNIs each and the balance 40% for retail category. Post issue its debt equity ratio will stand enhanced from 3.02% to 3.66%.
These bonds are rated 'CARE AAA' by CARE and 'IND AAA' by IRRPL indicating highest degree of safety regarding timely servicing of financial obligations and carry very low credit risk. The issue opens for subscription on 02.03.16 and will close on or before 10.03.16. Post allotment, NCDs will be listed on BSE. Allotment will be done on first come- first served basis. On performance front, its top and bottom lines has been steadily reporting progress over the years with rising EPS. For FY 2015 its EPS stood at Rs. 388.45.
This issue is lead managed by Axis Capital Ltd, Edelweiss Financial Services Limited, ICICI Securities Ltd, SBI Capital Markets Ltd and RR Investors Capital Services Pvt Ltd. Karvy Computershare Pvt Ltd is the registrar and SBICAP Trustee Co. Ltd. is Trustee for the bondholders.
Conclusion: As the interest rates are set to cool down going forward, this offer with above 7% tax free returns for longer tenure worth considering.
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
