Hudco, AU Small Finance extend rally on heavy volumes

Hudco surged 10% to Rs 86, while AU Small Finance Bank soared 9% to Rs 618 on BSE in intra-day trade

Shares of Housing and Urban Development Corporation Limited (Hudco) and AU Small Finance Bank have rallied upto 10%, extending their Tuesday’s rally on BSE, on back of heavy volumes.

Hudco surged 10% to Rs 86.20, its highest level since listing in May, on back of an over four-five jump in trading volumes. The stock of housing finance company on Tuesday ended 13% higher at Rs 78.40, after hitting high of Rs 79.70 in intra-day trade.

Till 11:21 am; a combined 36.86 million shares have already changed hands on the counter against an average sub five million shares were traded daily in past two weeks on BSE and NSE.

“The Exchange has sought clarification from Housing and Urban Development Corporation Ltd on July 12, 2017, with reference to increase in Volume,” BSE said in a statement. The reply is awaited.

Hudco made a strong debut on May 19, 2017, by settling at Rs 72.50, a 21% premium against its initial public offer (IPO) price of Rs 60 on the BSE. However, post listing, the stock had underperformed the market by falling 4% against 4% rise in the S&P BSE Sensex till Monday.

Hudco enjoys strong relationship with the state governments and their agencies and finances various central and state government schemes in housing and urban infrastructure development.  In most cases these loans are subject to repayment through allocations in state government budgets or recourse to alternate sources of revenue, which reduces the recovery risk of loans to state governments and their agencies.

AU Small Finance Bank has soared 9% to Rs 618, extending its previous day’s 5% gain, after making a stellar debut on Monday. Shares of the company ended at Rs 541, up Rs 183, or 51% over the IPO price of Rs 358 on first day of its listing.

“AU has reported a strong 48% profit after tax CAGR over FY2013- 17, and we believe it has the potential to deliver 30% PAT CAGR over FY2017-19,” Angel Broking said in a note.

According to analysts at IIFL Wealth Management, for AU Small Bank, in the initial phase post small finance bank (SFB) launch, growth and profitability would be restricted; but the longer run prospects seem bright. Conversion into SFB will augment earnings diversity and stability.