Shares of Indiabulls group companies continued to reel under pressure on the BSE on Tuesday, taking total losses at Indiabulls Housing Finance (IBHFL), for the past one week, at 48 per cent. IBHFL extended Monday's slide on concern over merger with Lakshmi Vilas Bank (LVB). The Reserve Bank of India (RBI) on Saturday initiated prompt corrective action (PCA) against LVB.
That apart, the Delhi High Court accepted a public interest litigation (PIL) filed by eminent lawyer Prashant Bhushan on Indiabulls Housing Finance, raising further concerns over the merger plan.
Indiabulls Housing Finance hit a 52-week low of Rs 226, down 12 per cent on the BSE, in intra-day trade today on back of heavy volumes. In the past one week, the stock of the housing finance company has tanked from a level of Rs 435, as compared to a per cent decline in the S&P BSE Sensex.
Among other group stocks, Indiabulls Ventures (down 10 per cent at Rs 111), Indiabulls Real Estate (down 5 per cent at Rs 43.65) and Indiabulls Integrated Services (down 5 per cent at Rs 123) were locked in their respective lower circuit band and saw no buyers at their counters.
Thus far in financial year 2019-20 (FY20), the market value of Indiabulls group companies have underperformed the market by falling in the range of 53 per cent to 74 per cent. In comparison, the benchmark index remained unchanged during the period.
“Asset-quality risks arising from a sizeable large-ticket commercial real estate portfolio of Rs 17,000 crore as on June 30, 2019 persist, and could impact the Indiabulls Housing Finance’s portfolio performance in a continuing economic downturn scenario,” CRISIL said in a rating rationale dated September 16, 2019.
Given the chunkiness of loans (average ticket size of Rs 150 crore), even a few large accounts experiencing stress could impact asset quality. Nevertheless, the company follows prudent lending practices and ensures sufficient collateral cover. Delinquencies in the commercial lending portfolio will remain a key monitorable, it added.