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Nirmal Bang Report
Housing and Urban Development Corporation Ltd.’s Q1 FY25 performance was in line with our expectations at the profit after tax level. Net interest income/pre-provision operating profit/profit after tax came in at a variation of -11.7%/-10.8%/0.3% versus our estimates.
Loan growth stood strong at 30% YoY/12% QoQ on the back of 1906% YoY/23.5% QoQ growth in disbursements with the Urban Infrastructure segment contributing a major part of the growth. With 10 million houses announced under the PMAY (Urban) in the Union Budget, HUDCO is expected to be a key beneficiary and hence the sanctions and disbursements in the housing segment are also expected to pick up pace.
While the cost of funds improved by 32 bps YoY to 7.36%, the net interest margin declined to 3% in Q1 FY25 versus 3.24% in Q1 FY24 (3.18% in FY24). This was on account of the disbursements being back-ended i.e a major part of it happening in June-24, the full impact of which will be seen in revenue in Q2 FY25. As a result, we expect the NIM to improve to 3.2%/3.3% in FY25E/FY26E.
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