HDIL fights for survival, investors on edge

Once Mumbai's largest real estate company by market cap, today, HDIL is left struggling to recover after it's stock crashed to nearly half its worth in January. Even though the management has gone to town denying bankruptcy threats, investor concerns are still not allayed. CNBC-TV18's Priyanka Ghosh reports.

It all began on the 21st of Jan this year, an urgent land payment of Rs 57 crore led HDIL's vice chairman to sell 1.2 percent of his 2.19 percent stake. The fact that the promoter pledge was as high as 98 percent did not make matters easier. In the next four sessions, the stock crashed from Rs 120.85 to Rs 74.65, shaving off almost 40 percent of its market capitalisation.
While investors panicked, market analysts questioned the need for a stake sale to raise just Rs 57 crores when the market capitalisation of the company stood at approximately Rs 5000 crore. Since then, the stock has not recovered, down more than 45 percent YTD, and the company's worth has nearly halved. So what is keeping HDIL subdued, despite management claims and assurances that all is well?
SP Tulsian of sptulsian.com says, "No new launches have been seen from the company. They are having transfer of development rights (TDRs) but either they have not received entitlement or they are not realising the price they are looking for. Nothing substantial which has vastly improved the liquidity of the company happened."
There is not much of a recovery in sight, especially with the MIAL phase II development in a deadlock that generates majority of HDILs TDR sales. Currently HDIL has no supply of TDRs; their once 5 million square feet of TDR sale is now nil. The management has outlined it will generate 2 million square feet of TDRs in the near future. But analysts say, it will need much more than futuristic projections to restore the confidence of investors. 

HDIL is also battling a debt of Rs 4000 crore, with an interest liability of over Rs 500 crores. HDIL has said it is committed to reduce debt by Rs 1000 crore in the next one year. There is the fiscal ending on March 31 approaching. According to banking sources, HDIL has to make significant loan repayments and bankers are now keeping a close watch on the deadlines that are coming up.