Although the management of Mumbai-based realty developer Housing Development Infrastructure (HDIL) refuted claims of bankruptcy, which was born after promoters sold 1 percent stake in open market, the damage done to the stock was too harsh to recover.
Although the management of Mumbai-based realty developer Housing Development Infrastructure ( HDIL ) refuted claims of bankruptcy, which was born after promoters sold 1 percent stake in open market, the damage done to the stock was too harsh to recover. In a conference call with analysts and fund managers, the company said the promoter had sold the shares to fund the last tranche of payment due on a land parcel the company had bought in 2010-11.
Investors chose to punish the apparent "careless" move of the promoters by butchering the stock; HDIL shares were down 15 percent to Rs 81.60 after having touched Rs 75 earlier in the day.
The stock has fallen around 33 percent since Tuesday, and fuelling investor concern is the fact that 98 percent of the promoter holding is pledged with financiers. Should the stock price continue to weaken, the promoters will have either deposit more shares as collateral or return a part of the money owed so as to maintain the collateral to loan value at a pre-decided level. Usually for realty companies, lenders loan about 50 percent of the value of the shares pledged.
HDIL has been trying to cut down its debt worth Rs 4,096 crore by 25-30% in the current financial year via FSI sales, TDR sales and project launches. According to experts, the move had made the company cash-starved as it did not receive cash from the FSI sales. To tide over this, Sarang Wadhawan, MD and vice chairman, sold 50 lakh shares for Rs 57 crore in the secondary market early this week.
The mood was also dampened since 98 percent of promoters' holdings are pledged, which analysts say indicate severe cash crunch in the company. However, in a conference call, the management said the company's was able to reduce standalone debt by Rs 200 crore to Rs 3472 crore.
In an attempt to allay fears, the company assured investors that promoters were not looking to sell further shares and would buyback stake from the market after six months, as per SEBI's norms. The management also mentioned the company's liquidity position was not a concern.
Meanwhile, analysts say that Lodha group coming out with aggressive rates in Mumbai have put pressure on realty players. Last week, Lodha Group had claimed that its residential project Codename Blue Moon at Worli received more than 1000 applications in few hours.
HDIL stock price
On November 21, 2014, Housing Development and Infrastructure closed at Rs 81.40, down Rs 1.05, or 1.27 percent. The 52-week high of the share was Rs 113.85 and the 52-week low was Rs 38.70.
The company's trailing 12-month (TTM) EPS was at Rs 7.02 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 11.6. The latest book value of the company is Rs 248.81 per share. At current value, the price-to-book value of the company is 0.33.
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