HUDCO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.8

📊 Core Financials:

- Quarterly PAT at ₹710 Cr vs ₹630 Cr previously → steady growth.

- ROCE at 9.62% and ROE at 15.7% → moderate efficiency.

- Debt-to-equity ratio at 7.03 → very high leverage, typical for housing finance institutions.

- Cash flows supported by lending operations, dividend yield at 1.95% adds investor appeal.

💹 Valuation Indicators:

- Current P/E: 15.1 vs Industry P/E: 21.2 → undervalued compared to peers.

- P/B ratio: ~2.35 (₹212 / ₹90.1) → reasonable.

- PEG ratio: 0.92 → attractive, suggests fair valuation relative to growth.

- Intrinsic value appears higher than CMP, indicating undervaluation.

🏢 Business Model & Competitive Advantage:

- HUDCO (Housing and Urban Development Corporation) focuses on financing housing and infrastructure projects.

- Competitive advantage lies in government backing, niche focus on affordable housing, and strong institutional presence.

- Market cap of ₹42,340 Cr reflects significant role in housing finance sector.

📈 Entry Zone & Long-Term Guidance:

- CMP ₹212 is below DMA 50 (₹224) and DMA 200 (₹224), showing short-term weakness.

- RSI at 32.3 and MACD negative → oversold zone, accumulation opportunity.

- Suggested entry zone: ₹200–₹210.

- Long-term holding recommended for exposure to housing finance, though leverage risk must be monitored.

Positive

• Undervalued compared to industry P/E (15.1 vs 21.2).
• PEG ratio of 0.92 indicates fair valuation relative to growth.
• Dividend yield of 1.95% provides steady returns.
• DII holdings increased by 0.66%.

Limitation

• High debt-to-equity ratio (7.03).
• ROCE (9.62%) is relatively weak.
• Stock trading below DMA levels, showing short-term weakness.

Company Negative News

• FII holdings reduced by -0.02%.
• High leverage increases financial risk in volatile interest rate environments.

Company Positive News

• Quarterly PAT improved from ₹630 Cr to ₹710 Cr.
• DII holdings increased by 0.66%.

Industry

• Housing finance industry is growing with government support for affordable housing and infrastructure projects.
• Industry P/E at 21.2 indicates sector is moderately valued compared to HUDCO’s lower P/E of 15.1.

Conclusion

⚖️ HUDCO shows steady growth, fair valuation metrics, and government-backed stability. However, high leverage and moderate return ratios pose risks. Entry is favorable around ₹200–₹210 for long-term investors, with potential for sustained growth in housing finance supported by policy initiatives.