HUDCO’s stock drops by over 11% after the government cuts the allocation for the Pradhan Mantri Awas Yojana (PMAY)-Urban in the 2025-26 budget. Despite strong Q3 earnings, the reduced budget allocation has raised investor concerns.
Housing and Urban Development Corporation (HUDCO), a public sector financial institution focused on providing loans for housing and urban infrastructure, witnessed a significant drop in its share price following the government’s budget announcement for 2025-26. The stock of HUDCO tumbled more than 11% to ₹192.5 on the Bombay Stock Exchange (BSE) during today’s trading session, reflecting market reaction to the reduced allocation for the Pradhan Mantri Awas Yojana (PMAY)-Urban.
The Union Budget for 2025-26 has allocated ₹19,794 crore for PMAY-Urban, which is a reduction of ₹10,377 crore, or 34.4%, compared to the ₹30,171 crore allocated in the 2024-25 budget. This decrease has raised concerns among investors, especially since the actual expenditure in 2023-24 was ₹21,684 crore. Although the new allocation represents a 44.8% increase compared to the revised estimate of ₹13,670 crore for 2024-25, the sharp cut has led to negative sentiment around HUDCO’s prospects.
As of 12:50 pm, HUDCO’s stock was trading at ₹197.3, down by 9.1%. The company’s share price has fallen 17% since the start of the year and has dropped by 35.5% over the past six months. However, in the past three years, the stock has surged by a remarkable 375%, demonstrating its long-term growth potential.
The decline in HUDCO’s stock comes despite its strong Q3 FY25 earnings, where it posted a 41.6% year-on-year growth in net profit, reaching ₹735 crore, up from ₹519 crore in the corresponding period of the previous year. The lender’s Net Interest Income (NII) also saw a significant 47% rise, totaling ₹983 crore in Q3 FY25 compared to ₹667 crore during the same period last year.
While the stock faced selling pressure, India’s mutual funds increased their investment in HUDCO during the October-December period. Mutual funds now hold a 1.83% stake in the company, up from 0.77% in the previous quarter ending in September.
In the broader market, shares of other companies, such as NBCC (a civil construction company), also saw declines, with the stock falling by over 5% to ₹90.5. Despite a more than 25% drop over the past six months, NBCC’s stock has surged nearly 300% over the last two years, indicating its potential for long-term growth.
Despite the short-term decline, analysts will be closely watching the stock’s performance in the coming months, especially after the market reaction to the reduced budget allocation for PMAY-Urban. The ongoing developments in HUDCO’s operations and the government’s future policies may offer insights into its prospects.
