DHFL share price hits 10-year low on Q4 net loss, grim financial outlook

Dewan Housing Finance Ltd (DHFL) share price hit 10-year low in early trade today after one of India's biggest home loan and property finance companies reported a huge standalone net loss of Rs 2,223 crore in the fourth quarter ended March 31, 2019 compared to a net profit of Rs 134 crore in the corresponding quarter an year ago. In FY2019, DHFL reported a net loss of Rs 1,036 crore compared to net profit of Rs 1,240 crore in FY2018.

DHFL share price hit lower circuit of 9.93% to 61.65 in early trade today compared to the previous close of 68.45 level on BSE. Later, DHFL share price fell 30% to 48.15 on BSE amid intense selling pressure. There were only sellers but no buyers for the stock. The small cap share has been losing for the last two days and fallen 32.35% during the period.

DHFL share price opened at a loss of 9.93% at 61.65 level on BSE. DHFL share price has lost 92.05% during the last one year and fallen 80.67% since the beginning of this year.

In another development, the housing finance company said its financial situation was so grim that it may not survive. The company said it was "undergoing substantial financial stress and its ability to raise funds was substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements."

Also read: Rakesh Jhunjhunwala has lost Rs 88.85 crore in this stock since March 2019

"The ability of the company to continue as a going concern is predicated upon its ability to monetise its assets, secure funding from the bankers/investors, restructure its liabilities and recommence its operations," it said in the notes.

"These developments may raise a significant doubt on the ability of the company to continue as a going concern," it said in notes accompanying results for the fourth quarter ending 31 March, signed by Chairman and Managing Director Kapil Wadhawan. Its dismal earnings in Q4 also led traders and investors to dump the stock in trade today. The firm said its gross NPAs (non-performing assets) as on March 31 2019 rose to 2.74% as against 0.96% during the corresponding period of previous fiscal.

However, DHFL managed to make repayments of over Rs 41,800 crore primarily through securitization of assets and repayment collections. The company's total assets under management (AUM) amount to Rs 119,992 crore as on March 31 2019 compared with Rs 1,11,318 crore as on March 31 2018.

"In the backdrop of a significant slowdown in disbursement and loan growth post September 2018, the financials of the company have been quite strained for the quarter impacting the overall performance of the year," said Kapil Wadhawan, Chairman and Managing Director, DHFL.

"However, due to the additional provisioning of Rs 3,280 crore (inclusing net loss on fair value), the company reported a net loss of Rs 2,223 crore for the quarter and net loss of Rs 1,036 crore for the whole year," Wadhawan added.

The firm also defaulted on interest payment to non-convertible debenture (NCD) holders aggregating Rs 48 crore. Dewan Housing Finance has seen a series of downgrades by credit ratings agencies sending its share price into tailspin.

On June 6 this year, Icra and Crisil downgraded ratings on Rs 850 crore worth of commercial paper of DHFL to 'default' from 'A4' due to the mortgage lender's deteriorating liquidity condition.

Crisil, in a note, said the downgrade to 'default' or 'D' reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) because of inadequate liquidity. The payments were due on June 4, 2019. The NCDs are not rated by Crisil.

Also read: DHFL posts net loss of Rs 1,036.05 crore in FY19

In a separate note, Icra said, "The rating revision factors in further deterioration in company's liquidity profile and delays in meeting scheduled debt obligation on June 4, 2019."

Icra added that given the stretched liquidity profile and limited visibility on fresh funding, the company is unlikely to be able to service its debt obligation with regard to commercial paper programme in a timely manner. The company has commercial paper (CP) worth Rs 750 crore maturing in June 2019 with the first repayment on June 7.

"With liquidity inadequate as on date to service debt and visibility very low on timely fund raising, we expect the CP to be in default on maturity," Crisil said.

DHFL gets 7 days to submit resolution plan to lenders: report

Edited by Aseem Thapliyal