Lot Of Demand For PM Awas Yojana, Potential Capex Under The Scheme Is Rs 13 Lk Cr: HUDCO | CNBC TV18

Summary

The transcript discusses the impact of the Pradhan Mantri Awas Yojana (PMAY) 2.0 on HUDCO, a housing and infrastructure financing company. Sanjay Ketra, CMD of HUDCO, highlights the government's commitment to affordable housing, the financial scope of the scheme, and HUDCO's potential disbursement of ₹1 lakh crore over the next few years. Ketra addresses the company's funding strategies, expected growth in lending, and profitability, with projected yields around 9%. He also outlines future targets for loan book growth, NIM, ROE, and ROA, noting HUDCO's long-term role in supporting affordable housing.

Takeaways

• 📈 The stock of the company discussed has risen by over 80% in 2024.
• 🏠 PMAY 2.0 is a landmark decision by the Indian government, targeting affordable housing in both rural and urban areas.
• 🏢 HUDCO (Housing and Urban Development Corporation) sees significant potential in the PMAY scheme, with a focus on affordable housing and infrastructure development.
• 💰 The total potential capital expenditure for PMAY 2.0 is projected to be 13 lakh crores.
• 🏡 The government aims to ensure that every Indian, especially the middle class, has access to housing, supported by interest subsidy schemes and affordable housing on rent.
• 💸 HUDCO plans to disburse 1 lakh crores under PMAY 2.0, with conservative figures indicating it will be achieved in 3-4 years.
• 📊 HUDCO's yields from this initiative are expected to be around 9%, with secured assets and a readiness from states to pay these rates.
• 🌍 HUDCO is exploring low-cost funding options from international markets and multilateral banks to support the affordable housing initiative.
• 📅 HUDCO aims to revise its disbursement targets beyond the current 35,000 crores after evaluating the status of PMAY 2.0 later in the year.
• 💼 HUDCO's loan book is expected to grow to 1.5 lakh crores by FY 26, with a focus on maintaining yields around 9.2% and spreads of 1.9-2%. Their ROE and ROA targets are set to improve to 14% and 2.5% respectively.

Q & A

What is PMAY 2.0 and how does it differ from the earlier version?

PMAY 2.0 is an updated version of the government’s affordable housing initiative, targeting both rural and urban households. It includes new monitoring frameworks to ensure time-bound implementation and focuses more on middle-class housing, with interest subsidy schemes and affordable rental housing.

How does PMAY 2.0 benefit companies like HUDCO?

PMAY 2.0 offers significant opportunities for HUDCO as it is involved in housing and infrastructure financing. The scheme’s estimated capital expenditure of 13 lakh crores for 3 crore households presents a large potential for lending, with HUDCO positioned to benefit from this growing demand.

Is there an interest rate cap on loans under PMAY 2.0?

No, PMAY 2.0 does not include an interest rate cap. HUDCO has the flexibility to make commercial decisions on loan rates based on market conditions and counterpart funding sources.

How much does HUDCO expect to disburse under PMAY 2.0?

HUDCO has set a conservative target to disburse 1 lakh crore under PMAY 2.0 over the next 3-4 years.

What is the expected yield for HUDCO from PMAY 2.0 disbursements?

HUDCO expects a yield of around 9% from its lending under PMAY 2.0, with secured assets ensuring profitability.

How will PMAY 2.0 impact HUDCO’s overall disbursement targets for this year?

HUDCO initially targeted 35,000 crores in disbursements this year. With PMAY 2.0 coming into effect, there could be an upside of around 10,000 crores, pushing the total disbursement target higher.

How does HUDCO plan to manage its funding costs for infrastructure projects?

HUDCO is tapping into international markets, such as the Japanese and USD markets, for low-cost funding. In 2023, it borrowed 1 billion USD, reducing its cost of funds to slightly below 7%.

What are HUDCO’s loan book and yield targets for the upcoming years?

HUDCO’s loan book is expected to reach 1.5 lakh crores by FY26, up from the current 1 lakh crores. The yield is projected to remain constant at 9.15% to 9.2%, and HUDCO aims to maintain a spread of 1.9% to 2%.

What are HUDCO’s expected return on equity (ROE) and return on assets (ROA) for this fiscal year and the next?

HUDCO's ROE has improved from 11% to 12.7%, with a target of over 13% next year and 14% by FY26. Its ROA is currently 2.5%, aligned with other infrastructure finance companies.

How does HUDCO’s involvement in consultancy work under PMAY 2.0 affect its profitability?

As the nodal agency for consultancy work and technical studies under PMAY 2.0, HUDCO gains a deeper understanding of the demand and challenges at the state level, helping improve its operational efficiency and profitability. However, direct consultancy fees were not mentioned as a major profit driver.