DHFL turns volatile post conference call; stock rebounds 27% from day's low

The stock moved 11% higher at Rs 123, bouncing back 27% from its six-year low price of Rs 97 touched on BSE in early morning trade on Monday.

Shares of Dewan Housing Finance Corporation (DHFL) rebounded 27 per cent from its intra-day low on Monday after the management in the conference call said that the company is seeking strategic partner to bring fresh equity.

The stock has moved 11 per cent higher at Rs 123, bouncing back 27 per cent from its early morning low after the management said allegations of financial irregularities are false.

"After announcing the sale of Aadhar Housing to Blackstone, the company is also seeking to sell units including Avanse Financial and has appointed banks to identify a partner to purchase the life insurance business", DHFL Chairman Kapil Wadhawan said in a conference call with investors.

Earlier, in the morning trade, shares of DHFL hit a six-year low of Rs 97, down 13 per cent on  BSE after the rating agency CARE has downgraded ratings for the company’s bonds, loans on moderation in financial flexibility for the housing finance company.

The stock of housing finance company hit its lowest level December 23, 2013, on BSE. In the past six trading days, it tanked 54 per cent form level of Rs 209 on January 25, 2019. In comparison, the S&P BSE Sensex was up 1 per cent during the same period.

CARE has cut ratings from “AAA” to “AA+” for debentures, loans and deposits. Rating for commercial paper (“A1+) has kept under watch with developing implications.

The revision in the long-term ratings takes into account moderation in financial flexibility of DHFL as evidenced by a sharp reduction in its share price and significant rise in bond spreads. While stock prices and credit spreads were negatively affected by NBFCs and HFCs post-September 2018, recent media news related to DHFL has further impacted market sentiment. DHFL’s ability to raise resources at competitive rates would be crucial for its profitability and long-term growth prospects going forward, CARE said.

CARE has placed the ratings under credit watch with developing implications in light of recent events and will continue to monitor the situation, it added. CLICK HERE TO READ FULL REPORT

At 12:05 pm, DHFL was trading 7 per cent higher at Rs 120 on BSE, as compared to a 0.28 per cent decline in the S&P BSE Sensex. The trading volumes on the counter jumped 1.5 times with a combined 88 million equity shares changed hands on the NSE and BSE so far.