Shares of Dilip Buildcon plummeted up to 14 per cent intra-day during the afternoon deals on the BSE on Wednesday after reports suggested that the roads and highways developer was looking to exit all of its Hybrid Annuity Model (HAM) based projects.
At 12:44 pm, the stock was trading at Rs 406 per share, down 6.3 per cent, having touched an intra-day low of Rs 372.15. In comparison, the S&P BSE Sensex was trading 0.24 per cent higher. The scrip has corrected by 41 per cent from its recent high of Rs 631.5 apiece, touched on May 27, 2019.
According to news reports, the firm is in final stages of talks to sell 12 of its HAM projects in nonbinding agreements.
“The proceeds from the sale will enable the company to bid for new projects while a portion of the debt may also be used to reduce borrowings,” an Economic Times report said quoting unnamed sources.
At March-end, the Madhya-Pradesh based infrastructure developer had long-term borrowings of Rs 1,145.9 crore.
“Given at least 40 per cent of the existing order book is HAM, developers need to bring in equity to manage their balance sheets.
That means, the ability to sell stake in projects and free up capital is crucial. We have seen some deals happening already. This would help sustain growth in order book without impacting credit risk profile,” Sushmita Majumdar, director at Crisil Ratings said in a report released last month.
Under Ham projects, 40 per cent of the cost is to be borne by the government while rest of the funding is provided by the builder in a mix of debt and equity.
Highway developers have lost appetite for the HAM projects in the wake of dried up funding from the banks and delayed appointment date.