Indiabulls Housing Finance falls 13% in two days on Moody's downgrade

Moody's on Monday downgraded the corporate family rating and the foreign currency senior secured rating of the housing finance company to B2 from Ba2 citing funding challenges for the company.

Shares of Indiabulls Housing Finance (IBHFL) dipped 8 per cent to Rs 182 on the BSE on Tuesday, falling 13 per cent in the past two trading days, after Moody's Investors Service on Monday downgraded the corporate family rating (CFR) and the foreign-currency senior secured rating of the housing finance company to B2 from Ba2, citing funding challenges for the company.

In addition, the ratings agency also downgraded Indiabulls' foreign and local currency senior secured MTN program ratings to (P)B2 from (P)Ba2. The outlook on all ratings, where applicable, remains negative, Moody's said in a statement.

The downgrade is driven by Indiabulls' ongoing challenging access to funding. Governance considerations were also a key driver of this rating action. The company's access to funding remains challenging. The continued decline in on-balance sheet loans is a reflection of its funding challenges, it added.

While access to funding remains challenging, its pool of liquid assets, ability to run down the loan book and roll over of its bank funding act as a buffer against this risk in the short-term. However, as the funding challenges prolong, the liquidity buffers may erode and expose the company to funding and liquidity risks. This is the key driver of the rating action, Moody’ said.

Meanwhile, Indiabulls Housing Finance said the company will consult the capital-markets regulator, the Securities and Exchange Board of India (Sebi), about its eligibility to buy back shares given the regulations on the ideal capital structure.

"The present market value of the company is at a steep discount to its historical valuation multiples, dented by circulation of rumours and false allegations against the company. The charges are false and malicious and the company is completely innocent of these charges," it said in a regulatory filing. READ FILING HERE

At 09:57 am, the stock was trading 7 per cent lower at Rs 184 on the BSE, close to its 52-week low of Rs 177, touched on October 11, 2019. In comparison, the S&P BSE Sensex was up 0.41 per cent at 38,369 points. A combined 11.7 million equity shares changed hands on the counter on the NSE and BSE.

Besides, other group stocks, too, were trading in the negative territory. Indiabulls Ventures hit 52-week low of Rs 92, down 8 per cent, and Indiabulls Integrated Services was locked in the lower circuit of 5 per cent at Rs 82.