Wednesday D-day for HDIL; stock eyes management answers

Wednesday will be a big day not only for real estate major HDIL, but for its investors, who have seen the stock fall nearly 58 percent since January this year. This is because the company is expected to give some much-awaited clarification on its performance and future prospects reports CNBC-TV18.

Mumbai-based real estate major, HDIL has had a tough year. And the pressure has increased ever since it defaulted on the payment of interest on its non-convertible debentures in March this year. Of graver concern to investors has been the fact that through all this, the management has maintained a stony silence. But this should change on Wednesday, when HDIL announces its annual results and addresses analysts.

The stock had already been under pressure since January this year, but the big blow came when HDIL defaulted on a mere Rs 8-10 crore interest payment on its NCDs (non-convertible debentures) worth Rs 2,095 crore, even as it booked FSI sales in the range of Rs 300 to 400 crore every quarter. This led ratings agency care to downgrade the rating on the NCD to ‘D’ and the stock crashed to an all-time low of Rs 47.90 per share.

Now the street expects HDIL to post fourth quarter revenues of around Rs 400 crore and a net profit of around Rs 210 crore. But what's of greater importance is the answers to several crucial questions, like is there a receivable issue with respect to fsi sales; why did the service tax department freeze HDIL's bank accounts; how much progress has HDIL made in reducing its Rs 4,000 crore rupee debt burden especially since it had outlined a plan to shave off Rs 1,000 crores by the end of FY14?

Experts say the company's stock, which has not risen by any significant amount since its collapse, will get a leg to stand on only if the management's answers to these questions are satisfactory. After all, the HDIL stock has seen the highest FII selloff between January and March 2013.