Dewan Housing Finance Corporation (DHFL) share price jumped 10 percent, hitting the upper circuit intraday on June 8 after National Company Law Tribunal (NCLT) approved Piramal Group's resolution plan.
The NCLT on June 7 approved Piramal Group’s overall resolution plan for the beleaguered mortgage lender Dewan Housing Finance (DHFL), with a few conditions. It rejected former DHFL promoter Kapil Wadhawan's plea to get access to a copy of the resolution plan.
Piramal Group, in its statement, said they are "pleased" by the judgement, noting that they received the endorsement of 94 percent lenders and subsequent approvals from the Reserve Bank of India (RBI) and the Competition Commission of India (CCI), which "reiterates the strength and quality" of its bid.
The stock was trading at Rs 22.85, up Rs 2.05, or 9.86 percent, at 12:10 hours. It has touched an intraday high of Rs 22.85 and an intraday low of Rs 20.70. There were pending buy orders of 304,833 shares, with no sellers available.
Also read: DHFL Insolvency Case: NCLT approves Piramal Group's resolution plan
The scrip also witnessed a spurt in volume by more than 5.58 times and was trading with volumes of 4,052,758 shares, compared to its five day average of 589,077 shares, an increase of 587.98 percent.
However, the NCLT's order is subject to final judgement from the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court's judgement on Kapil Wadhawan in the matter. On 25 May, the NCLAT stayed an order of the NCLT that directed the DHFL lenders to consider Wadhwan's settlement offer. This came after the RBI appointed administrator for DHFL appealed against the NCLT’s order at the appellate tribunal. NCLAT's final order is pending on this matter.
In its order on June 7, the tribunal asked the company's Committee of Creditors (CoC) to consider giving more money to small fixed deposit (FD) holders under the approved resolution plan. "We are not remanding the plan back to CoC; we respect their commercial wisdom," the NCLT said passing the order.
Also, the debt-ridden mortgage firm's shares would be delisted from stock exchanges post-acquisition by Piramal Capital and Housing Finance, which has emerged as the successful bidder for the company.
As part of the resolution process under the Insolvency and Bankruptcy Code (IBC), lenders led by Union Bank of India in January this year favoured the bid by Piramal Capital and Housing Finance to take over the beleaguered housing finance firm.
According to sources, shares of DHFL would be delisted post-acquisition as per the IBC guidelines and Sebi delisting norms. Besides, sources said, the company may merge itself with DHFL for which call would be taken after all legal and regulatory clearances are obtained.
The Piramal Group received a nod of the resolution plan for beleaguered mortgage lender resulting in Piramal Enterprises jumping over 6 percent. It was trading at Rs 2,091.85, up Rs 131.10, or 6.69 percent.
The scrip touched a 52-week high of Rs 2,098.25. It touched an intraday high of Rs 2,098.25 and an intraday low of Rs 1,941.
However, Jatin Gohil, Technical Analyst, Reliance Securities recommends booking profit in the stock with a target of Rs 1,620. "The stock rose to a 23-month high of Rs 2,055 on June 7, 2021, and formed an indecisive pattern-High Wave on the daily chart. The key technical indicators on the short-term timeframe chart tested their overbought zone and may reverse down," he said.
"We believe the stock may witness partial profit booking before resumes its northward journey. It could move towards Rs1,760 initially and then Rs 1,620 subsequently in next 2-3 months," he added.
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