DHFL Shares Crack 18% to Hit over 5-year Low After Crisil, ICRA Downgrade Ratings

Dewan Housing Finance Corp. Ltd (DHFL) stock tumbled as much as 18% to hit an intraday low of Rs 91.30 apiece, its lowest level in over five years, after Crisil and ICRA sharply downgraded the company’s Rs 850 crore commercial paper (CP) to ‘D’ from ‘A4+’ and ‘A4’, respectively.

The development comes a day after the mortgage lender delayed interest payment worth Rs 1,150 crore to the investors of non-convertible debentures (NCD).

DHFL’s rating has now been removed from the watch with negative implications by both Crisil and ICRA.

Crisil said in its note, “With liquidity inadequate as on date to service debt and visibility very low on timely fundraising, we expect the CP to be in default on maturity.”.

In a separate note, ICRA said: “The rating revision factors in further deterioration in the company’s liquidity profile and delays in meeting scheduled debt obligation on June 4, 2019.”

DHFL had Rs 750 crore commercial paper programme maturing in June 2019 with the first repayment on 7 June. Given the stretched liquidity position and limited visibility on fundraising, DHFL is unlikely to be able to service its commercial paper debt obligation in a timely manner, ICRA said.

Meanwhile, DHFL in its response said, “The action by the rating agencies is extremely surprising as the company has been making and continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations. These actions are unwarranted and the company is seeking clarification on the rationale that predicts DHFL’s inability to service pay‐outs on the due dates. Such a speculative rating rationale is not adequate."

DHFL added that since September 2018, it has repaid close to Rs 40,000 crore of financial obligation. To ensure adequate liquidity to meet the repayments, DHFL also sold its strategic retail assets including Aadhar, Avanse and DHFL Pramerica Asset Managers.

At 10.06 am, shares of DHFL were trading 11.2% lower at Rs 99.20 apiece on BSE. The stock price has fallen about 60% year-to-date and over 80% in the last one year.