DHFL tanks 18% as company stops fresh deposits, premature withdrawals

Last week, ratings agencies including Brickwork, CARE Ratings, Icra and Crisil downgraded the company's credit ranking and put them on a credit watch with 'negative implications'.

Dewan Housing Finance Corporation (DHFL) plunged as much as 18 per cent to Rs 107 in the early trade on Wednesday on the BSE after the non-banking finance company (NBFC) stopped accepting fresh public deposits and renewals of existing deposits.

The company has also halted premature withdrawals of its deposits, with immediate effect, in order to "reorganise its liability management".

Last week, most of the rating agencies including Brickwork, CARE Ratings, Icra and Crisil downgraded the company’s credit ranking and put them on credit watch with 'negative implications'.

The downgrade reflected limited progress in enhancing liquidity, selling/exiting riskier construction finance loans and delay in announcement of a strategic investor for the company.

“The company has only raised around Rs 950 crore through assignment of retail loan portfolio in the month of April 2019 which is lower than the envisaged amount. Furthermore, there has been no progress on selling or exiting project finance loans. Company has not been able to raise funds through traditional bank lines and debt market instruments either,” Brickwork had said in its rating rational.

Ratings agency Crisil too attributed the downgrade to greater-than-expected reduction in the company's liquidity position on the back of delayed fundraising from sell down of project finance loans and lower inflows from securitisation of non-housing loans. 

"As a strategic decision, the NBFC did not resort to securitisation of readily available housing loans to prop up the liquidity levels... It also has higher-than-scheduled liability repayments," the agency said.

Adding to the woes of the NBFC, the board of Reserve Bank of India (RBI), on Tuesday, refused to extend a special line of credit for the segment. CLICK HERE TO READ FULL REPORT

In the past four trading days, however, the stock outperformed the market by gaining 21 per cent from level of Rs 107 on May 16 to Rs 130 on Tuesday.

At 09:42 am, DHFL was trading 14 per cent lower at Rs 112 on the BSE, as compared to 0.23 per cent rise in the S&P BSE Sensex. A combined 23 million shares changed hands on the counter on the BSE and NSE so far. The stock was trading close to its 52-week low of Rs 97 touched on February 4, 2019 in intra-day trade.