Selling seemed to be unabated for the stock of Housing Development and Infrastructure Ltd.
After witnessing a crash of over 14 per cent, the HDIL stock lost another 22 per cent in early trade on the BSE on Thursday. The stock is currently trading at Rs 75.05, down 22.03 per cent.
The stock has been at the receiving end, ever since NSE disclosed that Sarang Rakesh Wadhwan, one of its promoters, offloaded part of his stake in the market.
Promoters, who hold 37.36 per cent stake in the company, have pledged their entire holding with financial institutions. It is not immediately known whether the financial institutions are also selling their stake.
Over 1.23 crore shares changed hands on the BSE against its two-week average of 47.4 lakh shares.
According to NSE bulk deal data, on Tuesday, HDIL Vice-Chairman and Managing Director Wadhwan had sold 36.79 lakh shares at an average price of Rs 113.97.
On Wednesday, Citigroup had sold 49.39 lakh shares at an average price of Rs 100.60. It was not immediately clear on whose behalf the sale was carried out by Citigroup. The buyers’ name was also not disclosed.
Land acquisition
“We are aiming at debt reduction. This move was primarily to fund the land acquisition we had entered into about a year back,” Wadhwan had explained to a TV news channel on Wednesday.
No details were shared about the land purchase but the company expects this acquisition to add substantial value. HDIL’s debt currently stands at Rs 4,000 crore but the company is confident of reducing it significantly in the quarters ahead, he said.
Early sign of default
However, market analysts tracking the stock remained sceptical. According to a senior real estate analyst, the sharp fall in the stock could be an early warning sign of default.
“It is quite unusual to see the promoter selling stake to fund land acquisition as it implies the company is not able to fund it otherwise and it could be viewed as a last resort. This move also indicates that the company’s debt repayments could get tighter from here on and could be seen as an early sign of default. We maintain a sell call on the stock unless there is a positive trigger by way of better realisations from the company’s sale of land parcels, which could help reduce its debt position,” he added.