Housing & Urban Development Corporation Limited (HUDCO) announced on 9 May 2025 that CARE Ratings Limited has assigned/affirmed its credit ratings.
Key Rating Actions by CARE Ratings Limited (dated 9 May 2025):
- Long-term / Short-term bank facilities (enhanced from ₹50,000 crore to ₹80,000 crore): Reaffirmed at CARE AAA; Stable / CARE A1+
- Long-term instruments – Bonds (various series FY11-12 to FY24-25, total amount reaffirmed): Reaffirmed at CARE AAA; Stable
- Long-term instruments – Bonds (FY20-21, reduced from ₹1,840 crore to ₹1,040 crore): Reaffirmed at CARE AAA; Stable
- Long-term instruments – Bonds (FY25-26, ₹42,199 crore): Assigned at CARE AAA; Stable
- Fixed deposit programme: Withdrawn
- Commercial paper (₹10,000 crore): Reaffirmed at CARE A1+
- Specific bond (ISIN INE031A08814, ₹0.00 crore outstanding): Withdrawn
Rationale and Key Rating Drivers:
- The ratings factor in HUDCO's strategic importance to the Government of India (GoI) for implementing policies in social housing and urban infrastructure.
- Strong parentage with GoI as a majority shareholder (75.0% stake as on 31 December 2024).
- Portfolio quality is strong as the majority is backed by central or state government guarantees.
- Adequate asset quality with Net Non-Performing Assets (NNPA) of 0.3% as on 31 December 2024 (vs 0.4% as on 31 March 2024).
- Diversified resource profile, healthy capitalisation (CAR 48.3% as on 31 December 2024), and adequate liquidity.
- Improved profitability with a Return on Average Total Assets (RoTA) of 2.4% (annualized, provisional) in 9M FY2025.
- Assets Under Management (AUM) grew to ₹1,18,931 crore as on 31 December 2024 (~41% YoY growth), partly due to increased infrastructure financing post transition to NBFC-IFC status in August 2024.
Key Weaknesses:
- Concentrated loan book: Top 20 exposures accounted for 81.0% of the total loan book and 451.2% of tangible net worth as on 31 March 2024.
- Increase in Stage 2 exposure by ~₹6,385 crore in 9M FY2025 due to slippage of one exposure remains a key monitorable.
Outlook:
- Stable: CARE Ratings expects HUDCO to remain strategically important to the GoI and maintain healthy profitability, capitalization, and asset quality.