Housing & Urban Development Corporation Limited — Credit Ratings, 09-04-2025: Credit Rating

CARE Ratings has reaffirmed the credit ratings for Housing and Urban Development Corporation Limited (HUDCO) across various instruments. The majority government ownership and strategic importance to the Government of India underpin its strong credit profile. The ratings reflect HUDCO's robust asset quality, characterized by a gross non-performing assets (NPA) ratio of 0.3% as of December 31, 2024, showing continued improvement.

HUDCO's assets under management (AUM) increased to ₹1,18,931 crore, marking a significant year-on-year growth of approximately 41%, fueled by heightened disbursements in urban infrastructure financing following its transition to a non-banking financial company focused on infrastructure (NBFC-IFC). The profitability metrics remain strong, with annualized return on average total assets (RoTA) of 2.4% for the first nine months of FY2025.

However, the concentration of its loan book remains a concern, with the top 20 exposures constituting 81% of the total loan book, making asset quality a key area to monitor. Despite the overall adequate liquidity profile, any potential credit slippage could negatively impact profitability and credit costs.

Investors may view HUDCO as a fundamentally sound entity given its government backing, healthy capitalization, and asset management strategies, prompting a cautious "hold" perspective moving forward.