Housing & Urban Development Corporation Ltd (HUDCO) Q2 FY27 Earnings Call: Targets Rs. 2 Lakh Cr Loan Book, Maintains 2% Spread and 3% NIM

Housing & Urban Development Corporation Ltd held its Q2 FY27 earnings call on November 04, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Broad-Based H1 Growth Across Disbursements, Book and Profit

• H1 FY 2026-2027 disbursements exceeded Rs.35,000 crore — up 37% vs. the previous year, with sanctions crossing Rs.1 lakh crore in the same period.
• Loan book grew 29% YoY to Rs.1.86 lakh crore — revenue from operations rose 26% and net profit rose 31% in H1 FY 2026-2027.
• Asset quality remains pristine — gross NPA declined to ~0.7% and net NPA stood at 0.04% as of Q2 FY 2026-2027.
• Blended cost of funds stable at ~7.07% in H1 FY 2026-2027 — despite a rising interest rate regime and elevated corporate bond yields.
• Q2 spread of 1.96% and NIM of 2.93% — slightly below the ~2% spread / 3% NIM targets management is maintaining for FY 2026-2027.

Rs.2 Lakh Cr in FY27, Rs.3 Lakh Cr by 2030; Deep Sanctions Pipeline

• Management targets a loan book of ~Rs.2 lakh crore in FY 2026-2027 — and reaffirmed guidance of Rs.3 lakh crore by 2030, initially given two years prior.
• Outstanding sanctioned pipeline of ~Rs.3–4 lakh crore — as of the Q2 FY 2026-2027 call, with conversion to disbursement expected to take time given project gestation periods of 3–5 years.
• FY 2026-2027 disbursement target held at Rs.65,000 crore — H1 already exceeded Rs.35,000 crore, leaving ~Rs.30,000 crore for H2; management sees no reason to revise the figure as of now, though it could be exceeded if project pace accelerates.
• Disbursements to be tracked quarter-to-quarter — so the market can anticipate the year-end landing figure by end of FY 2026-2027, supported by strengthened regional offices and intensified state engagement.
• World Bank report cited by management — estimates the urban sector will require "around Rs.250 lakh crore by 2050" (third-party industry context, not a company commitment).
• Government of India announced the Urban Challenge Fund — a "Rs.1 lakh crore grant from the Centre plus Rs.1 lakh crore from state governments," with private participation envisaged for Rs.2 lakh crore (effectively ~50% VGF for urban infrastructure); the government also announced 50-year interest-free "Saski" loans to states and higher 16th Finance Commission grants.

2% Spread / 3% NIM Maintained; Resets to Lift H2

• Management committed to ~2% spreads at FY 2026-2027 year-end — and to sustaining ~2% spreads year-on-year thereafter; intra-year dips possible from market fluctuations, cost of borrowing, disbursement timing and tran-wise loan resets.
• NIM target of at least 3% for FY 2026-2027 — management aims to maintain that level going forward; ED Finance Achal Gupta confirmed the 2% spread / 3% NIM is presently being maintained.
• Rs.20,000 crore Government of India loan carries only a 40 bps spread — excluding it, spreads are ~2% and NIM ~3%; this loan exits the book in FY 2028-2029.
• MCLR raised by 15 bps after a two-year gap — ~Rs.20,000 crore of loans are estimated to reset during H2 FY 2026-2027 on the annual reset cycle, which management expects will increase the bottom line; the 15 bps transmission and ECB impact will reflect in Q3 FY 2026-2027 results.
• Yields have bottomed in Q2 FY 2026-2027 — management guided they will rise over Q3–Q4 FY 2026-2027; reset frequency is being shifted from annual to quarterly in some state-loan cases, with transmission to borrowers not expected to be a problem.
• Tax rate guided at ~21% going forward (FY 2026-2027 onwards) — per Director Finance Daljeet Singh Khatri, in response to a question citing a current ~15.5%.

Minimal NPA Stock; Negative Credit Costs Through FY28

• Residual net NPA is a minuscule Rs.1,200 crores — mostly NCLT and DRET cases; management is hopeful of resolution "in a year's time" (period unspecified), with many cases at post-order stages and some projects in liquidation yielding periodic inflows.
• ~95% of NPA loans are to private sector entities — management's clarification in response to a query on recovery challenges with government/semi-government borrowers.
• H1 FY 2026-2027 recovery of Rs.32 crores with ~Rs.359 crores resolved — vs. FY 2025-26 recovery of ~Rs.403 crores with ~Rs.660 crores resolved, and FY 2024-25 recovery of Rs.416 crores.
• Negative credit costs expected for the next one to two years (through FY 2027-2028) — as resolutions occur and provisions are reversed, a link the CMD drew explicitly from the current provision coverage ratio of ~95%.
• ROA committed at 2%–2.2% (period unspecified) — the CMD noted ROA can dip during phases of accelerated growth and recover to this band as loans are settled, calling it among the best in the industry; no DuPont constituent-level breakdown was provided.
• Collateral comfort on mortgage-backed assets — ED Finance Achal Gupta noted around 20–25 sold assets whose values have risen substantially, so management is "very sure" of recovering its dues.

ECB-Led Funding; Upper Layer NBFC Compliance Burden

• $2 billion raised via ECBs in FY 2026-2027 so far — at an effective landed cost after hedging of ~6.75% (slightly below 7%); bank funding currently available at ~7.25%.
• ~USD 2 billion borrowed under the RBI swap window at ~6.5–6.75% average cost — targeting slightly more than USD 3 billion in total, with remaining tied-up loans to be disbursed before 31 December (window closure, i.e., Q3 FY 2026-2027).
• ~Rs.35,000 crore of borrowings will come at 6.5–6.75% — against total borrowings of ~Rs.1.65 lakh crore (Q2 FY 2026-2027), which the CMD said will reduce significant pressure on the borrowing side in FY 2026-2027.
• Bond market paused in Q2 FY 2026-2027 — bond yields have hovered around 8% for the past 2–2.5 months; HUDCO raised Rs.2,200 crore via bonds in Q1 FY 2026-2027 at roughly 7.25% and is waiting for the right time to return.
• RBI notified HUDCO in the upper layer NBFC list in August 2026 — a reason the CMD attributed to the Rs.1 lakh crore loan book; exposure limits of 25% (plus 5% via board approval) are not yet binding, but the compliance burden from RBI will be higher. Management is working aggressively to ensure no new NPAs and full RBI compliance.
• FX risk fully mitigated — foreign currency translation losses were zero in Q2 FY 2026-2027; most FX exposure is covered under the RBI swap window, with a small FCNR portion maturing in 2028 and remaining loan maturities of ~5 years.

PMAY 2.0 Tailwinds; Cautious Entry Into Private/PPP Lending

• ~Rs.58,000 crore sanctioned cumulatively under PMAY 1.0 and 2.0 combined — with ~Rs.48,000 crore released; under PMAY 2.0, ~20 lakh dwelling units have already been sanctioned, and the government has a target to sanction ~40 lakh units during FY 2026-2027.
• Management indicated total investment required under PMAY 2.0 is ~Rs.4 lakh crore (period unspecified) — HUDCO will extend loans toward states' counterpart funding only where a state actually seeks support; many strong states are arranging their own funds via SDL, described by management as the cheapest form of money for the non-remunerative housing sector.
• ~Rs.9,000 crore of PPP projects sanctioned to date — primarily slum redevelopment, road sector, and one renewable energy project; the Dharavi slum redevelopment is in an advanced stage of documentation, with disbursements hoped to begin during Q3 FY 2026-2027 ("maybe," on a tentative basis); no other PPP disbursements have started yet.
• Private sector lending launched after ~1.5 years of guideline formulation — total sanctions of Rs.9,000 crore as of Q2 FY 2026-2027 (Dharavi, HAM road projects in a consortium, one energy sector project); management stated there is no target for PPP funding and requires investment-grade borrowers, third-party appraisal (e.g., CRISIL or similar), a PMA and a TRA.
• Asset monetization: ~1 lakh sq. meters of space to be created over the next 3 years — with management expecting income from these assets to start flowing thereafter.
• Strategic repositioning — HUDCO aims to become the primary player guiding urban infrastructure for the country, launching the Urban Invest window (YoWin/IWin) and a new strategic business group for urban local bodies; management attributes the growing loan book to government programs supplementing its efforts, supporting the Government of India's goal of a developed nation (Viksit Bharat) by 2047.