Indiabulls Housing slips after credit rating downgrade

Indiabulls Housing Finance fell 0.25% to Rs 423.20 after credit rating agency, CRISIL, downgraded its long-term rating on the housing finance company.

Shares of Indiabulls Housing Finance lost 7.63% in four trading sessions to its current market price of Rs 423.20, from a recent closing high of Rs 458.20 on 4 September 2019.

CRISIL has revised its rating on the long-term debt instruments of Indiabulls Housing Finance (IBHFL) to 'CRISIL AA+' from 'CRISIL AAA'. The long-term ratings are on 'Rating Watch with Developing Implications'. The rating on the commercial paper (CP) issue and the short-term non-convertible debenture programme has been reaffirmed at 'CRISIL A1+'.

The rating revision factors in the continued challenging operating environment for non-banking financiers {non-banking financial companies (NBFCs) including housing finance companies (HFCs)} with issues in funding access, especially for those with a wholesale lending book. Interest from debt investors in the NBFC / HFC sector has reduced in the recent past, and a material turnaround is not expected in the near term. Although IBHFL has been raising resources since September 2018 on an ongoing basis, the ease of raising resources and the cost of these resources have been impacted and improvements on this front have not materialized as expected. The reduction in recent resource raising can nevertheless be partly attributed to management's conscious decision to limit incremental borrowings, especially term borrowings, as they await regulatory approvals on the impending merger with The Lakshmi Vilas Bank (LVB). The company raised around Rs 12,500 crore between 1 April 2019 and 31 August 2019 as compared to around Rs 17,000 crore raised in the quarter ended 31 March 2019.

CRISIL will resolve the rating watch and take a final rating action once there is clarity on the regulator's stance on the proposed merger, the organisational structure and business strategy of the merged entity. CRISIL will also continue to monitor the fund raising by IBHFL, both in terms of the quantum as well as the cost.

On BSE, 3.28 lakh shares were traded in Indiabulls Housing Finance counter, compared to a 2-week average of 13.84 lakh shares. The stock hit an intraday high of Rs 430.70 and an intraday low of Rs 422.10.

It hit a 52-week high of Rs 1,237.75 on 14 September 2018 and a 52-week low of Rs 406.20 on 6 September 2019.

Indiabulls Housing Finance is a housing finance company.

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