HUDCO Shares Rise 2.5% on CBDT Nod for ₹5,000 Crore Capital Raise

On April 21, 2025, shares of Housing and Urban Development Corporation Limited (HUDCO) closed at ₹234.90, marking a 2.62% increase from the previous close of ₹228.90. This uptick followed the Central Board of Direct Taxes (CBDT) approving HUDCO’s request to raise ₹5,000 crore through the issuance of Zero-Coupon Bonds.​

What Are Zero-Coupon Bonds?

Zero-Coupon Bonds are debt instruments sold at a discount to their face value and do not pay periodic interest. Instead, investors receive the full face value at maturity. This structure allows issuers like HUDCO to raise funds without immediate interest obligations, providing flexibility in managing cash flows.​

Understanding the Fundraising Mechanism & the CBDT Approval

HUDCO plans to raise ₹5,000 crore through zero-coupon bonds, for which the approval of the CBDT is crucial, as it ensures the tax-exempt status of these bonds, making them more attractive to investors. Source: The Mint

The CBDT, under the Ministry of Finance, issued Notification No. S.O. 1744(E) dated April 17, 2025, permitting HUDCO to issue five lakh Zero Coupon Bonds with a tenure of ten years and one month. These bonds will be redeemed at ₹5,000 each upon maturity. ​

HUDCO’s Financial Strategy

HUDCO has outlined a clear roadmap for increasing its funding capabilities in FY 2025–26. Earlier in April, the company’s board approved a substantial annual borrowing plan amounting to ₹65,000 crore. This figure reflects a significant scale-up compared to previous years, indicating HUDCO’s commitment to fueling its housing and urban development agenda more aggressively.

To facilitate this enhanced borrowing, HUDCO also raised its overall borrowing ceiling from ₹1.5 lakh crore to ₹2.5 lakh crore. This step isn’t just a procedural update—it signals a stronger push towards long-term financing of projects that align with national development priorities, including affordable housing, smart cities, and infrastructure initiatives across states.

In effect, this move gives HUDCO more flexibility to maneuver, allowing it to tap into various funding channels as opportunities arise. The higher limit also provides flexibility to respond quickly to emerging project needs or shifts in the credit environment without waiting for further board approvals. Source: The Mint

Strategic Borrowing Plans

In the current financial year, HUDCO has already been executing a multi-pronged approach to funding. In addition to the ₹5,000 crore being raised through zero-coupon bonds, the company has been working on mobilizing up to ₹23,000 crore by the end of March 2024. This capital is being raised through a mix of instruments, including:

• Medium-term loans
• Short-term credit
• Taxable bonds

The goal here is diversification — not relying solely on one kind of borrowing product, but tapping into multiple sources to optimize interest rates, repayment schedules, and risk exposure. As of December 2023, HUDCO had already raised approximately ₹12,000 crore out of its ₹23,000 crore target, indicating good traction with lenders and investors.

This blend of borrowing tools enables HUDCO to maintain a balance between its immediate liquidity needs and long-term funding requirements. It also reflects a disciplined approach to financial planning, allowing the institution to meet current commitments while being prepared for future, larger-scale investments. Source: Business Finance

Market Response and Share Performance

The market responded positively to the CBDT’s approval, with HUDCO’s share price rising by 2.5%. This increase reflects investor confidence in the company’s financial strategies and its role in supporting government-backed housing and infrastructure initiatives.

Over the past five years, HUDCO shares have delivered a robust return of over 990% to investors. In the last one year alone, the stock has gained more than 20%. Despite this long-term growth, the stock has slipped slightly in 2025, down by over 1% year-to-date.

According to NSE data, HUDCO touched its 52-week high of ₹353.95 on July 12, 2024, and hit a 52-week low of ₹158.90 on March 3, 2025. More recently, the stock has shown strong momentum, rising 15.83% over the past month and nearly 9% in just the last five trading sessions. As of Monday’s market close, HUDCO’s market capitalisation stood at ₹47,024.63 crore.

Implications of the Fundraising

The green signal from the CBDT to raise ₹5,000 crore via zero-coupon bonds marks an essential milestone in HUDCO’s financing roadmap. Zero-coupon bonds provide a tax-efficient means of raising funds, particularly when backed by CBDT approval. They are issued at a discount and redeemed at face value, which lowers upfront costs for the company and enhances its appeal for investors who can benefit from tax exemptions under Section 10(15)(iv)(h) of the Income Tax Act.

From HUDCO’s perspective, this infusion of ₹5,000 crore serves as additional working capital to support the increasing demand for housing finance and urban development. Whether it’s infrastructure projects in tier-2 and tier-3 cities or state-led housing initiatives, this funding will be used to scale operations and accelerate project timelines.

More broadly, this move aligns with HUDCO’s goal of strengthening its capital structure, reducing borrowing costs, and expanding its lending capacity. It is also a reflection of the government’s broader focus on infrastructure-led growth, making HUDCO a key enabler in achieving these targets. Source: The Mint

Conclusion

HUDCO’s recent share price increase reflects investor confidence following the CBDT’s approval for a significant capital raise. The company’s proactive financial strategies, including the issuance of Zero Coupon Bonds and the expansion of its borrowing limits, position it to effectively support housing and urban development initiatives in the coming years.

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