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Hudco Dividends Soar: Profits Fuel 31% Stock Growth
19 Sep
Summary
- Hudco's net profit grew at 20% CAGR over five years.
- Stock price returned 31% CAGR during the same period.
- Company consistently paid over 30% of net profit as dividends.
Hudco, a Navratna central public sector enterprise, is a notable NBFC-infrastructure finance company in India. Over the past five years, it achieved a 20% CAGR in net profit, accompanied by a 31% CAGR in stock price returns. The company demonstrates a commitment to shareholder returns by consistently distributing over 30% of its net profit as dividends.
In FY26, Hudco declared a total dividend of ₹1,211.2 crore, comprising interim and final payouts, resulting in a dividend yield of 3.6%. The dividend per share has significantly increased, nearly doubling from ₹3.5 in FY22 to ₹6.05 in FY26. This financial strength is supported by a substantial 27.5% year-on-year revenue growth in FY26, reaching ₹13,150.4 crore, and a 48.9% surge in net profit to ₹4,034.4 crore.
Asset quality remains a strong point, with urban infrastructure financing dominating 74.7% of its loan book as of Q1FY27. Gross NPAs are low at 0.96%, with net NPAs at 0.048%, and a high provision coverage ratio of 95.06%. Hudco maintains a Capital to Risk-Weighted Assets Ratio (CRAR) of 39.4%, significantly exceeding the 15% regulatory threshold, ensuring capital adequacy for lending growth and dividend distributions.
The company's borrowing strategy includes a diversified mix, with domestic sources constituting over 70%. The cost of borrowings averaged 6.95% in Q1FY27, while the yield on loan assets stood at 8.78%. Hudco aims to expand its infrastructure loan portfolio to ₹3 lakh crore by 2030, supported by a ₹2.5 lakh crore sanction pipeline. This growth is underpinned by a strong net worth of ₹22,867.3 crore as of Q1FY27.
