State-run Housing and Urban Development Corporation (HUDCO) plans to raise funds from the Japanese market through the external commercial borrowing route next month, as it seeks to bring down overall financing costs, chairman and managing director Sanjay Kulshrestha told ET.
The plan is expected to help HUDCO raise funds at a 6.5-7% rate.
The housing and infrastructure finance firm’s current cost of borrowing is around 7.5%, which it is planning to reduce by 10 basis points by the end of the FY24. “We are making efforts to reach out to the Japanese market in February. Our objective is to cut down our cost of borrowing; infrastructure is more sustainable if you have low-cost funding,” Kulshrestha told ET.
HUDCO is also looking to expand its loan book to ₹1.5 lakh crore by FY26 from around ₹80,000 crore now, and ECBs would be a key component to bring down overall cost.
Kulshreshtha did not give details of the quantum as the plan was being fine-tuned. Economists are pencilling in a change of stance from the Reserve Bank of India’s monetary policy committee at its meeting in June and see a 25 basis points rate cut in the August meeting.
“Now, there is a hope that the cost will come down after six months,” Kulshrestha said, adding that the company was also making an appeal to the government to give it some priority sector or development finance institution kind of status so that it can avail financing at concessional rates. On the issue of finance, Kulshrestha said he was confident that HUDCO will meet its sanction target of ₹50,000 crore for FY24 and end the year with a better bottom line.
However, the housing finance company is unlikely to meet its ₹18,000-crore fund-raising target and may have to revise it down by nearly a fifth.
More MoUs
Kulshrestha, who took charge of HUDCO in October last year, noted that the listed entity was preparing the ground for at least 10 MoUs with states in the coming fiscal, focusing not just on states but specific projects.
“We have already started a process of studying the state plans, capital expenditure plans, infrastructure plans and budgets. We are also studying the gross state domestic product to assess the financial stability of the states,” said Kulshrestha.
HUDCO, which recently signed a ₹14,500-crore MoU with Gujarat, is likely to end the year with a nearly ₹80,000 crore loan book. On the sharp spike in real estate prices, Kulshreshtha said market-determined rates were realistic and that the real estate market can not be classified as overheating, as Covid-induced liquidity issues had led to a fall in prices.”I think the market-determined rates are always the realistic rates,” he said.
