Ace investor Rakesh Jhunjhunwala raised his stake in Dewan Housing Finance Ltd when the stock crashed 60% last month. The big bull bought 13.34 lakh shares of the housing finance firm, raising his stake to 3.19% at the end of September quarter compared to 2.8% for the quarter ending June.
Sensing a big opportunity, Jhunjhunwala bought the distressed stock to raise his holding to 1 crore shares for the quarter ending September compared to 86,65,264 shares in the previous quarter.
On September 21, the Dewan Housing Finance stock fell up to 60 per cent or 364 points in trade which spurred heavy selling in other housing finance stocks. The stock lost up to Rs 10,000 crore in market capitalisation due to the crash. Other NBFC stocks such as Indiabulls Housing Finance cracked 14.84 percent, Reliance Home Finance fell 18.30%, Gruh Finance (17.66%), Repco Home Finance dropped 12.08 percent, PNB Housing Finance 9.23%, LIC Housing Finance 14.84% and Bajaj Housing Finance (19.96%).
The crash came after news spread that DSP MF was forced to sell commercial papers of Dewan Housing Finance in the secondary market at a higher yield of 11%. The higher yields for the commercial papers were due to tight liquidity into the system.
The crash led to panic selling in stocks of other hosuing finance firms which led the midcap and small cap indices lower leading to the Sensex losing 1128 points and Nifty falling 368 points in intra day trade.
However, the stock market recovered after the management of DHFL and other firms allayed concerns over their financial position.
By then considerable damage had been done to the Dewan Housing stock. The stock pared some losses in late afternoon trade and closed 42% or 259 points lower at 351 level on the BSE. The Sensex closed 279.62 points, or 0.75%, lower at 37,121.22, while the Nifty 50 fell 91.25 points, or 0.81%, to close at 11,143.10.
Meanwhile, the stock is trading 1.30% higher at 285 level in trade today. The stock has lost 51.14% since the beginning of this year and has fallen 49.01% during the last one year.
The stock has lost 53.79% during the last one month. However, the stock has gained 16.88% during the last one week.
Dewan Housing Finance Corporation is a deposit-taking housing finance company. The company focuses on providing financing products to the lower and middle-income segments in India, primarily in Tier II and Tier III cities, and towns. It offers housing loan and non-housing loans. It offers loans for construction or purchase of residential property and loans against property.
The company has presence in approximately 349 locations, including approximately 182 branches, over 146 service centers, approximately 18 circles/cluster offices, over two disbursement hubs and a collection center in India.