HUDCO March 2017
Table of contents 1. Company Overview 2 2. Key Growth Drivers 12 3. Key Strengths 13 4. Financial Performance 17 5. Experienced Board & Management 21 6. Strategy 23 Appendix
Disclaimer Housing and Urban Development Corporation Limited (“ HUDCO ” or the “ Company ”) is proposing, subject to receipt of requisite approvals, market conditions and other considerations, to undertake an initi al public offering of its equity shares (the “ Equity Shares ”) in India by way of an offer for sale (the “ IPO ”) and has filed a draft red herring prospectus (“ DRHP ”) with the Securities and Exchange Board of India (“ SEBI ”). This presentation (the “ Document ”) has been prepared by the Company solely for informational purposes and is not and should not be construed as an offer lett er, offering circular, offering document, draft red herring prospectus, red herring prospectus, invitation, advertisement or prospectus as defined under the Companies Act, 2013 as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India. The contents of the Document have not been reviewed by any regulatory authority in any jurisdiction. The information contained in the Document is not intended to, nor should it, form the basis of any investment decision. The Document does not constitute an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities in any jurisdiction, and nothing contained herein shall form basis of any investment decision, contract or commitment whatsoever. It does not constitute a recommendation to invest in any securities. The Document is being furnished to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person, in whole or in part, for any purpose. The distribution of the Document in certain jurisdictions may be restricted by law, and the recipients into whose possession the Document come should inform themselves about and observe such restrictions. In particular, neither the Document nor any copy hereof may be, directly or indirectly, taken or transmitted into or distributed in Canada, the People’s Republic of China, Japan or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. Any potential investor should note that investment in equity and equity-related securities involve a high degree of risk. Any decision on whether to invest in the Equity Shares described in the DRHP may be made only after a red herring prospectus has been registered with the Registrar of Companies, National Territory of Delhi & Haryana (the “ Red Herring Prospectus ”) and must be made solely on the basis of the Red Herring Prospectus (if you are in India) as there may be material changes in the Red Herring Prospectus. Potential investors are advised to read the section titled "Risk Factors" in the Red Herring Prospectus carefully before making an investment decision in the IPO. The contents of the Document have not been independently verified. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information, including any projections, estimates, targets and opinions contained herein, and no responsibility or liability whatsoever is accepted as to any errors, omissions or misstatements contained herein and, accordingly, none of the Company or its affiliates, shareholders, directors, advisors, representatives or any such person's officers or employees (collec tively, “ Representatives ”) accepts any responsibility or liability whatsoever (in negligence or otherwise, including any third party liability) for any loss or damage (including consequential loss or damage) howsoever arising directly or indirectly from the use, distribution or reliance of the Document or its contents or otherwise arising in connection with the Document. The Document is a summary only and it is not the intention to provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the financial position or prospects of the Company. The past performance portrayed in the Document may not be indicative of the future performance of the Company. Neither the delivery of the Document nor any further discussions with any of the recipients shall, under any circumstance, create any implication that there has been no change in the affairs of the Company and neither the Company nor any of the Representatives are under an obligation to update, revise or affirm the information in the Document. The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933 (the “ U.S. Securities Act ”), and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. The Company is an “investment company” (as defined in the U.S. Investment Company Act of 1940, as amended, and the related rules (the “ U.S. Investment Company Act ”) and has not been and will not be registered under the U.S. Investment Company Act. Accordingly, any offer or sale of the E quity Shares will be made (a) to persons in the United States and to U.S. persons (as defined in Regulation S (“ Regulation S ”) under the U.S. Securities Act) who are both (i) “ qualified institutional buyers ” (as defined in Rule 144A under the U.S. Securities Act) and (ii) “ qualified purchasers ” (as defined in Section 2(a)(51) of the U.S. Investment Company Act) pursuant to Rule 144A under the U.S. Securities Act and Section 3(c)(7) of the U.S. Investment Company and (b) to persons outside the United States who are non-U.S. persons pursuant to Regulation S. The Book Running Lead Managers to the IPO (“ BRLMs ”)are acting for the Company and not the recipient of the Document and the receipt of the Document is not to be taken as cons tituting the giving of investment advice by the BRLMs to the recipient nor to constitute a customer or client relationship between the recipient and the BRLMs. Accordingly, the BRLMs will not be responsible to the recipient for providing protections afforded to customers or clients or advising the recipient. The DRHP is available on the website of SEBI at www.sebi.gov.in and the respective websites of the BRLMs. Potential investors should not rely on the DRHP filed with SEBI in making any investment decision. 1
Company Overview
HUDCO at a Glance Average Yield on Average Interest Earning Assets, Average Cost on Average Interest-Bearing Liabilities and Spread 2,3,4 Company Overview HUDCO is a wholly-owned Government company with more than 46 years experience 11.01% 10.81% in providing loans for housing and urban infrastructure projects in India 10.07% 9.81% Plays a key role in various Government’s schemes to develop the Indian housing and 2.37% 3.10% 2.09% 2.11% urban infrastructure sectors 8.43% 89.93% 1 of total loan portfolio were to State Governments and their agencies 7.97% 7.91% 7.70% HUDCO's total outstanding loan portfolio was INR363,858mn 1 6 FY14 FY15 FY16 9M FY17 Housing Finance Loans: INR112,281mn 1 (30.86%, of total outstanding loan Average yield on average interest-earning assets portfolio) Average cost of interest bearing liabilities Urban Infrastructure Finance loans and project-linked bonds: INR251,577mn 1 Net interest margin 5 (69.14%) 5.18% Housing finance loans are classified into 4.59% 4.26% 4.11% Social housing Residential real estate Retail finance (branded as HUDCO Niwas) With respect to urban infrastructure finance, HUDCO gives loans for projects relating to water supply, roads and transport, power, among others 6 FY14 FY15 FY16 9M FY17 For particulars relating to income, profit before tax, profit after tax, share capital, reserves, earnings per share, dividends and book value per share of the Company for the last three years (based on the restated financial statements of the Company), please refer to slides 17 – 20. 1. As of December 31, 2016. 2. The average yield on average interest-earning assets is the ratio of interest income and income that is directly attributable to income on loans and advances (such as loan application fees and front-end fees payable by the borrower prior to sanction/disbursement of the loan) on interest earning assets to Average interest-earning assets for the year or period, as applicable 3. Average cost on average interest-bearing liabilities is the ratio of interest expense and other borrowing costs to average interest-bearing liabilities for the year or period, as applicable 4. Spread refers to difference between average yield and average cost of interest bearing liabilities Net interest margin (“ NIM ”), for any given period represents the ratio of net interest income to the average of interest-earning assets, expressed as a percentage 5. 2 6. Annualized figures based on actual figures for nine months ended December 31, 2016.
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