HUDCO announced that its Bond Allotment Committee has approved a significant debt fundraising initiative worth ₹1,442 crore through perpetual subordinated debentures. The committee meeting, held on February 13, 2026, from 12:30 PM to 1:15 PM, sanctioned the issuance under Series-1, 2025-26 on a private placement basis.

Issue Structure and Size

The debenture issue is structured with strategic flexibility to accommodate market demand:

The debentures are characterized as perpetual subordinated, listed, unsecured, taxable, rated, and non-convertible instruments, providing HUDCO with long-term capital flexibility.

Interest Terms and Payment Schedule

The financial terms of the debentures offer attractive returns for investors:

The annual interest payments will continue subject to the exercise of the call option by the issuer, providing predictable income streams for bondholders.

Perpetual Nature and Call Option

The perpetual structure distinguishes these debentures from conventional debt instruments. HUDCO retains a call option exercisable on the Call Option Date, being 10 years from the allotment date (February 13, 2026) or any annual anniversary thereafter. The exercise of this option requires prior approval from the Reserve Bank of India.

Upon exercising the call option, HUDCO may pay the outstanding maturity amount along with accrued but unpaid coupon and additional interest, if any. The bonds will not carry any obligation for coupon or otherwise after the maturity date once all amounts due have been paid.

Regulatory Compliance and Security Features

The debenture issuance complies with Regulation 30 and 51 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Key security and operational features include:

• Security Status: Unsecured
• Special Rights: None attached
• Payment History: No delays or defaults reported
• Redemption Details: Not applicable due to perpetual nature

The company confirmed no history of payment delays exceeding three months from due dates or defaults in interest or principal payments, reinforcing its creditworthiness for potential investors.

HUDCO has received the highest credit rating of AAA with stable outlook from Acuite Ratings for its Rs 4500.00 crore Perpetual Additional Tier 1 Bonds. The rating assignment was communicated through a press release dated February 6, 2026, highlighting the company's strong financial position and strategic importance to the Government of India.

Rating Details and Rationale

The rating reflects HUDCO's position as a strategically important government-owned financial institution, with the Government of India holding a 75% stake as of September 30, 2025. Acuite Ratings emphasized the company's role as the nodal agency for key government programmes in affordable housing and urban development projects across India.

Strong Financial Performance

HUDCO demonstrated robust financial growth across key metrics during FY2025. The company's profitability showed significant improvement with net interest income increasing from Rs 2722.29 crore in FY2024 to Rs 3482.31 crore in FY2025.

Improved Asset Quality

The company's asset quality showed marked improvement during FY2025, with both gross and net non-performing assets declining substantially. The collections efficiency remained strong at 98.13% as of March 2025.

Strategic Growth Plans and Market Position

HUDCO has outlined ambitious growth plans including the development of 25 smart cities within the next 5 years. The company aims to reach around Rs 3 lakh crore loan book from the overall national infrastructure space of Rs 111 lakh crore by FY2030. Planned disbursements for the end of FY2026 are targeted at Rs 52,000 crore, representing continued strong growth momentum.

The rating agency noted that HUDCO's diversified resource profile and access to funding through bonds, banks, and financial institutions supports its growth strategy. The average cost of funds stood at 7.45% in FY2025, which compares favorably with other public financial institutions.

Key Rating Considerations

While the rating reflects strong fundamentals, Acuite Ratings highlighted certain areas of focus. The loan book shows high concentration with the top 20 exposures accounting for 79% of the portfolio. The company's gearing increased to 5.97 times in FY2025 from 4.45 times in FY2024, though this remains within acceptable limits given the growth trajectory.

The stable outlook indicates that Acuite expects HUDCO to maintain its strong market position and financial performance. Key rating sensitivities include the company's ability to control slippages on vulnerable assets, expand its loan book profitably, and maintain adequate capitalization levels.

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