<h1>HUDCO Accelerates Growth, Targets Zero NPA, Fuels Infrastructure</h1>

Ashwin Thakker

— 2 min read
  • Sales Outlook (Sanctions): HUDCO aims to exceed FY '25 sanctions of INR1.24 Lakh Crore, with Q1 FY '26 already at INR34,000 Crore. A pipeline exceeding INR1.5 Lakh Crore supports future growth, and the company expects to overachieve its FY '30 target of INR3 Lakh Crore.
  • Margin Outlook (NIM, Spreads): Despite a temporary dip in Q1, Net Interest Margin (NIM) is projected to recover to over 3% in Q2 FY '26, with healthy spreads maintained. The company anticipates a yield correction to 9.1%-9.2% due to reduced repo rates.
  • Disbursement Outlook: Targeting approximately 30% growth in disbursements for FY '26 over FY '25 (from INR40,000 Crore), potentially reaching over INR50,000 Crore. Q1 FY '26 recorded INR12,800 Crore. PMAY 2.0 disbursements, dependent on state initiatives, are expected to significantly contribute from Q3/Q4.
  • Asset Quality Outlook (NPA): HUDCO is striving for a "net zero NPA" status within 16 months, having already reduced net NPA to below 0.1%. Significant resolutions for existing NPA loans (totaling INR1,157 Crore) are anticipated within the next six months.

HUDCO commenced FY '26 with a robust performance, reporting an all-time high Q1 disbursement of INR12,800 Crore. This strong start reinforces its pivotal role in India’s infrastructure development. The company’s latest earnings call highlights ambitious growth targets, unwavering commitment to asset quality, and strategic expansion into new urban infrastructure segments, signaling a confident outlook for the future.

Robust Growth and Financial Performance

HUDCO has demonstrated a strong start to FY '26, with Q1 sanctions reaching approximately INR34,000 Crore and disbursements marking an all-time high of INR12,800 Crore. The company aims for roughly 30% growth in full-year disbursements, aspiring to exceed INR50,000 Crore. The loan book has expanded to INR1.34 Lakh Crore in Q1 and is projected to surpass INR1.50 Lakh Crore. This growth is underpinned by a significant sanction pipeline exceeding INR1.5 Lakh Crore. Despite a temporary Q1 dip, the Net Interest Margin (NIM) is expected to recover to over 3% in Q2, reflecting continued healthy financial spreads.

Strategic Expansion and Future Opportunities

HUDCO is strategically broadening its financing scope, actively exploring new urban infrastructure segments like metros, e-mobility, water projects, and state-owned road initiatives. The company is set to capitalize on substantial market opportunities, including the Urban Challenge Fund and the National Project Pipeline, representing over $300 billion in investment. HUDCO plans dedicated urban financing offices and refined product offerings. PMAY 2.0 disbursements, though not yet factored into current guidance, are also anticipated to provide significant additional growth from Q3/Q4.

HUDCO’s Q1 FY '26 performance demonstrates robust financial health and an ambitious outlook. The company is poised for continued strong growth in sanctions and disbursements, alongside a relentless pursuit of 'net zero NPA' status. Its strategic focus on diversifying urban infrastructure financing underscores its vital role in India's development, promising a dynamic future for stakeholders.

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