Shares of Indiabulls Housing Finance declined 8% intraday after rating agency Moody's downgraded the housing lender. Moody's changed the corporate family rating (CFR) and the foreign-currency senior secured rating of the housing lender to B2 from Ba2, citing funding challenges as well as governance issues. Moody's also noted RBI's rejection of Indiabulls Housing Finance's merger with Lakshmi Vilas Bank.
Indiabulls Housing Finance shares opened 4.5% lower at Rs 189 on the BSE, in comparison to the last closing of Rs 197.90. Later Indiabulls Housing stock price fell 7.93% to the intraday low of Rs 182.2 apiece. The stock has fallen 8.07% in the last 2 days.
Indiabulls Housing share value is trading lower than 5, 20, 50, 100 and 200-day moving averages. A total of 35.25 lakh and 321.70 lakh shares changed hands on the bourses BSE and NSE, respectively. As per market depth data on BSE, there is 30% buying over 70% selling on the stock.
In a recent conversation with Business Today, company vice-chairman and MD Gagan Banga admitted that the company was facing perception issues and addressing them was the company's top priority. The share value of the stock has eroded 18% in one week, 55% in one month and over 75% year-to-date.
"As the funding challenges prolong, the liquidity buffers may erode and expose the company to funding and liquidity risks. This is the key driver of the rating action," said Moody's.
The global credit rating agency further added, "The proposed merger with Lakshmi Vilas Bank would have provided a vote of confidence in governance, as it would have meant that the company passed the regulator's fit and proper criteria for becoming a bank. Hence, the rejection by the Reserve Bank of India of this proposal on October 9 is a credit negative."
In another developement, Indiabulls Housing Finance, said that it is considering the option of buyback of shares and plans to take a final decision on the same after getting confirmation from market regulator Securities and Exchange Board of India (SEBI).
As of 1330 IST, Indiabulls Housing shares were trading 4.90% lower at Rs 188.20 on the BSE.
By Rupa Burman Roy