At an attractive dividend yield of 9.6%, this government-backed midcap is the hot bet

Share on Tuesday. closed on 36.25 each, a drop of 0.55%. The market cap of the company is approx. 7,256.89 crores. At the current closing price, HUDCO’s Dividend The yield is 9.6%.

HUDCO in top 10 dividend yield stock,

As per HDFC Securities report, HUDCO derives significant strength from majority government ownership (81.8 per cent stake) and AAA rating which provides comfort to lenders and helps reduce borrowing cost for the company. It plays an important role as a nodal agency for implementation of government policies in high priority areas of social housing and urban infrastructure. Its portfolio is relatively low-risk profile with a focus on government-sponsored urban infrastructure and social Accommodation projects.

In the last five decades, HUDCO has sanctioned a total of 17,326 housing and urban infrastructure projects with a total loan component of 224,607 crore and disbursement of 188,404 crore till March 31, 2022. Also, the company has sanctioned over 1.93 crore houses in the country, both in rural and urban India.

In the longer term, Atul Karva Research Analyst at HDFC Securities said in his report, “We expect housing demand to increase with increasing urbanisation, better affordability and higher incentives provided by the government. This is likely to be beneficial. Likely companies like HUDCO. The government is also looking to improve urban infrastructure and provide better living conditions to the growing urban population. HUDCO has restricted its new exposure to the private sector since 2013. Legacy Private sector loans account for only ~3% of the total loan book as of March 22.”

Further, the analyst’s note said, “We expect the debt book of the company to grow at a conservative CAGR of ~8.5% in FY22-FY24E. PAT to grow at 6% CAGR on account of higher basis on account of exceptional items.” expected, steady spread, and high delinquency.FY22 profit was aided by provision write-backs 246 crore, increasing the ROA by 2.2%.”

Additionally, the note said, “Writeback benefits may not be available in the coming years and we expect the ROA to hover around 2%. Most of the concerns are reflected in the price and the stock is available at an affordable price.” Valuation and provides attractive dividend returns.”

In FY22, HUDCO introduced . Total dividend paid of 3.5 per equity share to the shareholders in aggregate 35%. HUDCO’s dividend yield stood at 8.5% in FY12. In FY21, the company paid dividend 2.2 per share.

The dividend yield of a share is the ratio of the dividend paid per equity share to the shareholders at the current price of the equity share. Stocks with high dividend yield as compared to benchmarks like Sensex and Nifty 50 are called high dividend yield stocks. The high dividend yield also gives a fair sense of the stock’s value value.

HUDCO’s dividend yield has increased steadily as currently taking into account the current price on BSE, the yield has reached 9.6% in the latest FY so far – as compared to the FY 2012 print.

HDFC Securities analyst believes that investors can buy this stock in the band 36-36.5 (0.44x FY24E ABV) and add more 32.5-33 Band (0.4x FY24E ABV) for a reasonably priced base case 40 (0.49x FY24E ABV) and Bull Case Fair Value 43 (0.53x FY24E ABV) in the next 2-3 quarters.

HUDCO shares remained lower 19 when the nationwide lockdown due to the first wave of the pandemic came into effect on March 25, 2020. Since then, the shares have risen more than 91%.

HUDCO is focused on providing long term finance for construction of houses for residential purposes or finance or housing and urban development programs in the country. It also finances infrastructure projects.

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.