The stock of Housing Development and Infrastructure Ltd (HDIL) got hammered at the bourses on Wednesday after the rating of the company’s issue of non-convertible debentures was revised to ‘default’ by Credit Analysis and Research Ltd (CARE).
The scrip fell by 19.6 per cent to close at Rs 48.85 on the NSE. Today it touched a low of Rs 47.80 — the lowest level since the stock got listed on July 24, 2007.
The stock has overall seen a fall in value by 57.6 per cent so far this year and is currently has a market cap of Rs 2,040 crore.
The rating agency had revised the non-convertible debentures (NCD) rating 135
of the company to CARE D, which denotes default or are expected to be in default soon.
Early sign of default
The company, however, said it has not accepted the said rating assigned by CARE. “We would like to reiterate the company’s strong financial and operational performance and sound fundamentals and the company has submitted to CARE to review or restore the rating,” said the exchange filing.
Several real estate analysts had noted the company’s earlier move in January of a partial stake-sale by promoter Sarang Rakesh Wadhawan to fund land acquisition could be seen as an early sign of default.
The company had stated that the transaction was aimed at debt reduction and “primarily to fund the land acquisition we had entered into about a year back.” The company’s standalone debt was Rs 3,466.94 crore as at quarter ended December 31, 2012. It had also reported a 31.09 per cent fall in consolidated net profit. “Though going by asset valuation, the company is valued higher, its current income generating capacity is the preferred criterion for valuation or re-rating of the stock. However, if the company goes in for some amount of distress selling of its non-core land assets from its markets such as Hyderabad and Kochi to pay its debt, it could improve the company’s prospects,” said Sandipan Pal, Realty Analyst, Motilal Oswal.
Attempts to contact the company management went unanswered.