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HUDCO 2023-24 Annual Report Analysis

Mon, 9 Sep

HUDCO has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during the year 2023-24.

HUDCO Income Statement Analysis

• Interest income during the year rose 10.4% on a year-on-year (YoY) basis.
• Interest expenses were up by 10.1% YoY during the same period.
• Operating expenses declined by 2.7% YoY during the year.
• The company's net interest income (NII) increased by 11.1% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 3.1% in FY24 as against 3.2% in FY23.
• Other income increased by 237.2% YoY during the year.
• Net profit for the year increased by 24.4% YoY.
• Net profit margins during the year increased to 27.2% in FY24 from 24.1% in FY23.

HUDCO Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	70,495	77,843	10.4%
Other Income	Rs m	1,104	3,723	237.2%
Interest Expense	Rs m	45,071	49,608	10.1%
Net Interest Income	Rs m	25,424	28,235	11.1%
Operating Expense	Rs m	3,521	3,425	-2.7%
Pre-provision Operating Profit	Rs m	23,007	28,533	24.0%
Provisions & Contingencies	Rs m	438	514	17.4%
Profit before tax	Rs m	22,892	28,434	24.2%
Tax	Rs m	5,878	7,267	23.6%
Profit after tax	Rs m	17,014	21,167	24.4%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.2	3.1
Net profit margin	%	24.1	27.2

For Investors: Our Big Prediction

HUDCO Balance Sheet Analysis

• The company's deposits during FY24 stood at Rs 0 m as compared to Rs 1 m in FY23, thereby witnessing a decrease of 100.0%.
• Advances for the year stood at Rs 913.3 bn as compared to Rs 792.0 bn during FY23, a rise of 15.3%.
• Cost of deposits for HUDCO fell 79.0% and stood at 90.0%, while yield on advances rose to 0.0%.
• The lender's investments fell to Rs 3.3 bn during the year from Rs 6.7 bn in FY23.
• Borrowing stood at Rs 264.1 bn, a growth of 90.6% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 938.9 bn as against Rs 813.9 bn during FY23, thereby witnessing a rise of 15.4%.

HUDCO Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	154,436	166,126	7.6%
Advances	Rs m	792,027	913,338	15.3%
Deposits	Rs m	1	0	-100.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	428.6	90.0
Investments	Rs m	6,653	3,292	-50.5%
Borrowings	Rs m	138,593	264,111	90.6%
Total Assets	Rs m	813,928	938,907	15.4%

Current Valuations for HUDCO

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 10.6, an improvement from the EPS of Rs 8.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 250.8, stands at 12.8 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 3.0 times, while the price to income ratio stands at 3.5 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	35.2	38.9
Earnings per share (Unadj.)	Rs	8.5	10.6
Diluted earnings per share	Rs	8.5	10.6
Avg P/E ratio	Rs	5.3	12.8
Avg P/ABV ratio	Rs	1.0	3.0
Avg Market Cap	Rs	89,835	270,457
Dividends per share (Unadj.)	Rs	3.85	4.15

Ratio Analysis for HUDCO

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio deteriorated and stood at 91,333,770.0x during FY24, from 113,146,700.0x during FY23. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 1.59x during FY24, from 0.90x during FY23. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): HUDCO's capital adequacy ratio (CAR) was at 57.7% as on 31 March 2024 as compared to 73.8% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 12.7% during FY24, from 11.0% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 2.25% during FY24, from 2.09% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 9.24% during FY24, from 8.81% during FY23. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. HUDCO's gross NPA ratio stood at 2.7% as of 31 March 2024 compared to 3.4% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of HUDCO was 0.4% in financial year 2024. This compared with 0.5% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	113,146,700.0	91,333,770.0
Debt to Equity Ratio	x	0.9	1.6
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	73.8	57.7
Return on Equity	%	11.0	12.7
Return on Assets	%	2.1	2.3
Return on Capital Employed	%	8.8	9.2
% of Gross NPAs	%	3.4	2.7
% of Net NPAs	%	0.5	0.4
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how HUDCO has performed over the last 5 years, please visit here.

HUDCO Share Price Performance

Over the last one year, HUDCO share price has moved up from Rs 77.0 to Rs 250.8, registering a gain of Rs 173.8 or around 225.7%.

Overall, the S&P BSE SENSEX is up 23.3% over the year.

(To know more, you can check out historical annual results for HUDCO here and quarterly results for HUDCO here)