Summary
Housing and Urban Development Corporation Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 04, 2026, 4:00 PM IST
Event Participants
Executives 4 Achal Gupta (GM Finance), Daljeet Singh Khatri (Director Finance), M. Nagaraj (Director Corporate Planning), Sanjay Kulshrestha (Chairman & Managing Director)
Analysts 5 Arul (KSEMA Wealth), Devyam Joshi (9To3 Capital), Nemin Doshi (Fortress Group), Parth (DAM Capital Advisors), Rati Pandit (Nirmal Bang), Sumeet Rohra (Smartsun Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Loan Book | ₹1.55 lakh crores | +25% YoY; exceeded FY26 guidance of ₹1.50 lakh crores ahead of schedule. |
| Net Profit (9M FY26) | ₹2,030 crores (approx) | Impacted by ₹470 crores onetime FCNR loss; adjusted PAT would be ~₹2,500 crores. |
| Net Interest Margin (NIM) | 2.88% (9M FY26) | Slight compression due to backloaded disbursements; management expects 3.0%-3.1% on annual basis. |
| Net NPA | 0.06% | Close to zero; reflecting successful resolution of legacy stressed assets. |
| Gross NPA | ₹1,600 crores | Reduced by ₹385 crores in current FY; ₹800 crores currently under NCLT liquidation. |
| Spread | ~2.0% | Management aims to maintain this spread as they scale the loan book. |
| Debt-to-Equity | 7.28x | Rising due to growth; management aims to bring below 6x via Tier-1 perpetual debt. |
| Cost of Funds (Foreign) | ~6.0% | Includes hedging costs for Japanese currency (Yen) long-term loans. |
Geographic & Segment Commentary
- Urban Infrastructure: This core segment focuses on water supply, sewerage, and drainage. Key projects include the Godavari water supply (Andhra Pradesh), Jal Jeevan Mission in two states, and desalination plants in coastal Tamil Nadu.
- Transport & Logistics: Strategic focus on high-speed connectivity and metro rail. Active funding for Shaktipeeth Expressway (Nagpur to Goa), Bhopal and Indore Metros, and transit-oriented development at four Chennai metro stations.
- Aviation: Expanding footprint in regional connectivity under UDAN. HUDCO is currently financing four airports in Andhra Pradesh and an international-level airport at Kangra to boost state tourism and logistics.
- Emerging Sectors: Diversifying into private sector PPP models across five key sectors: Real Estate, Roads, Ports, Airports, and Energy Transition. These projects typically involve collaboration with commercial banks.
Company-Specific & Strategic Commentary
- Urban Invest Window: Launched a one-stop-shop platform to assist Urban Local Bodies (ULBs) in project creation, bankability assessment, financial closure, and convergence with government schemes.
- “IFC” Status Diversification: Leveraging its Infrastructure Finance Company mandate to move beyond housing into sector-agnostic infrastructure, targeting a ₹3 lakh crore loan book by 2030.
- Asset Quality Management: Implemented intensive monitoring of cash flows and project progress; SMA-2 accounts have been significantly reduced and resolved.
- MOU Pipeline: Currently holds ₹7 lakh to ₹8 lakh crores in MOUs, with a firm committed loan sanction pipeline of ₹2.5 lakh crores.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Annual Disbursement | ₹50,000 crores (FY26) | Targeted to maintain the current growth trajectory of ~25% in the loan book. |
| Loan Book Size | ₹3.0 lakh crores (FY 2029-30) | Driven by Viksit Bharat initiatives and ₹80 lakh crore urban investment requirement in India. |
| Forex Impact | Zero (From Q1 FY27) | FCNR 1-year borrowings are being phased out; Q4 FY26 will be the final quarter with currency volatility impact. |
| NPA Resolution | Resolution of ₹800cr balance | Management expects to resolve most remaining non-NCLT NPAs by the end of next financial year. |
Risks & Constraints
| Risk | Context |
|---|---|
| Leverage Risk | Debt-to-equity has risen to 7.28x, approaching the ECB regulatory cap of 10:1. Management is planning perpetual debt instruments to bolster Tier-1 capital. |
| Currency Volatility | 9M FY26 saw a ₹470 crore loss on unhedged FCNR borrowings. While long-term ECBs are hedged for 15 years, short-term currency fluctuations have impacted recent profitability. |
| Competitive Pressure | Aggressive entry of commercial banks and other NBFCs (REC, PFC) into urban infra. HUDCO relies on its MoHUA alignment and niche understanding of ULB policies to maintain “right-to-win.” |
Q&A Highlights
Forex Loss Clarification
- Question: What is the exact impact of fair value changes on FCNR borrowings? (Arul)
- Answer: Total loss for 9 months is ₹470 crores. This was due to currency fluctuations exceeding hedging limits on 1-year FCNR loans. HUDCO will cease 1-year FCNR borrowings, making Q4 FY26 the last quarter with such impact (Sanjay Kulshrestha).
Loan Book Growth & MOUs
- Question: How do MOUs translate into actual disbursements? (Sumeet Rohra)
- Answer: Of ₹7-8 lakh crore MOUs, ₹2.5 lakh crore is in the committed sanction pipeline. Disbursement typically starts 6-12 months post-sanction, with 20% in Year 1 and the balance over 3-4 years (Sanjay Kulshrestha).
Asset Quality and Stage 3 Assets
- Question: Are there any hidden stressed assets or restructured loans? (Devyam Joshi)
- Answer: No assets are under moratorium or restructured status that aren’t already classified. There has been zero addition to Stage 3 assets in the last 8-12 quarters (Daljeet Singh Khatri).
Capital Adequacy & Leverage
- Question: How will you manage the high debt-to-equity ratio? (Nemin Doshi)
- Answer: HUDCO plans to issue perpetual debt instruments that qualify as Tier-1 capital within the next 2-3 months to bring the ratio below 6x (Daljeet Singh Khatri).
Key Takeaway
HUDCO delivered a robust performance in Q3 FY26, surpassing its FY26 loan book target of ₹1.50 lakh crores ahead of schedule to reach ₹1.55 lakh crores, representing 25% YoY growth. While headline profitability was impacted by a ₹470 crore onetime FCNR forex loss, the core business remains strong with net NPAs at a record low of 0.06% and a healthy committed sanction pipeline of ₹2.5 lakh crores. Strategically, the company is pivoting from a housing-centric lender to a diversified Infrastructure Finance Company (IFC), aggressively participating in metro, airport, and expressway projects. Management is actively addressing leverage concerns through planned Tier-1 capital raises and expects to eliminate currency volatility from Q1 FY27 onwards. With a clear roadmap to double the loan book to ₹3 lakh crores by 2030, HUDCO is positioned as a primary beneficiary of India’s urban infrastructure push under the Viksit Bharat framework.
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