The mortgage lender's liquidity dropped to Rs 2,775 crore as of end-April.
"The downgrade is driven by more-than-expected reduction in the company's liquidity because of further delays in fund raising from sell down of project finance loans and lower inflows from securitisation of non-housing loans," the agency said in a note last week.
Its scheduled aggregate cash outflows (including loan repayment and securitisation payouts) till July 2019 remains high, at around Rs 8,400 crore.
Exercise of option by investors in NCDs with acceleration clauses will materially increase the scheduled outflow, it said.
The rating agency said the company, as a strategic decision, also did not resort to securitisation of readily available housing loans to prop up the liquidity levels.
It believes there is heightened additional risk of unscheduled early redemption of non convertible debentures NCDs.
Its plans to raise equity of up to Rs 2,000 crore but timely receipt of funds is critical at this juncture and visibility of the same is limited.
"The company's liquidity levels are expected to remain low with reduced cushion or buffer for upcoming cash outflow," it said.
The management continues to focus on induction of a strategic investor and securitisation of non-housing loan exposures, which remain critical for restoring market confidence, the note added.
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