Negative tax rate drives HUDCO profit surge as margin falls again
Consolidated net profit rose 172.26% YoY, but pre-tax profit fell 21.24% sequentially as costs outpaced revenue and interest remained elevated.
Filed 14 May 2026, 15:26 IST · Housing & Urban Development Corporation Ltd (HUDCO)
Key takeaways
- Consolidated net profit rose 172.26% YoY to Rs 1,981.31 cr, but a -219.05% tax rate did most of the work.
- Operating margin fell 7.16 percentage points QoQ as expenses grew 83.47% against revenue growth of 3.84%.
- The stock's initial 1.76% rise turned into a -6.10% move by day five, versus a 1.70% typical absolute move after the last eight results.
Price around the results
A tax credit, not operating profit, drove the earnings jump
HUDCO's consolidated revenue grew 25.23% YoY, while operating profit rose only 3.58%; interest expense increased 29.80%, pushing pre-tax profit down 39.13%. The tax line turned into a credit, producing a -219.05% tax rate versus 28.67% a year earlier and lifting net profit 172.26%. Other income contributed 10.02% of pre-tax profit, so the reported earnings increase has limited operating support.
Costs compressed margins despite revenue growth
Sequentially, revenue increased 3.84% but expenses jumped 83.47%, which narrowed operating margin by 7.16 percentage points. The year-on-year margin decline was larger at 17.47 percentage points, while interest expense rose 29.80%. At 83.52%, HUDCO's operating margin remained 24.11 percentage points above the 59.41% median for the 52 Financial Services peers that had reported.
Q4 marked the fourth straight quarterly margin decline
Operating margin has fallen in every quarter from Q4FY25's 100.99% to 96.29%, 95.45%, 90.68% and 83.52% in Q4FY26. The sequential deterioration continued even as revenue reached a new level, indicating that the cost burden has been rising faster than operating income.
The initial market rise reversed sharply
The stock rose 1.76% on the results day but was down 6.10% by the fifth session and 6.18% by the fifteenth. That was a materially larger move than the 1.70% median absolute reaction across the last eight results, during which the stock fell six times and rose twice.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹3,563 cr | ₹3,431 cr | +3.84% | +25.23% |
| Other income | ₹62 cr | ₹74 cr | -16.35% | +527.12% |
| Expenses | ₹587 cr | ₹320 cr | +83.47% | — |
| Operating profit | ₹2,976 cr | ₹3,111 cr | -4.35% | +3.58% |
| Operating margin (%) | 83.52% | 90.68% | — | — |
| Interest | ₹2,413 cr | ₹2,394 cr | +0.80% | +29.80% |
| Depreciation | ₹4 cr | ₹3 cr | +26.00% | +7.69% |
| Profit before tax | ₹621 cr | ₹788 cr | -21.24% | -39.13% |
| Tax | ₹-1,360 cr | ₹75 cr | — | — |
| Net profit | ₹1,981 cr | ₹713 cr | +177.88% | +172.26% |
| EPS (₹) | ₹9.90 | ₹3.56 | +178.09% | +171.98% |
Operating margin of 83.52% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +1.76% | +0.58% |
| Next session | -5.90% | — |
| 5 sessions | -6.10% | -7.13% |
| 15 sessions | -6.18% | — |
| 30 sessions | -5.25% | — |
Volume on the results session was 1.34× its 20-day average.
What to watch
- Whether operating margin stabilises after falling to 83.52%.
- Whether the tax rate moves back from -219.05% toward a normal positive rate.
- Whether interest expense growth moderates from 29.80% YoY.