Indiabulls Group stocks under pressure; Indiabulls Housing tanks 14%

Indiabulls Housing Finance's stock has now fallen below its QIP price

Shares of Indiabulls Group companies were under pressure at the bourses on Monday. The group's financial arm, Indiabulls Housing Finance's shares tanked 14 per cent, while realty firm Indiabulls Real Estate was locked in 10 per cent lower circuit on the BSE.

Shares of Indiabulls Integrated Services, too, were frozen at 5 per cent lower circuit at Rs 43.50; while Indiabulls Ventures slipped 3 per cent at Rs 219 on the BSE. In comparison, the S&P BSE Sensex was down 1.7 per cent at 38,193 points at 02:43 pm.

Indiabulls Housing Finance tanked 14 per cent to Rs 152.80. The stock has now plunged 18 per cent in the past three trading days on the BSE to fall below its qualified institutional placement (QIP) price of Rs 196.37 per share.

Indiabulls Housing Finance raised Rs 683 crore through the QIP. A QIP is a fundraising route that allows listed companies to raise capital through equity or equity linked instruments quickly. The company intends to use the proceeds from the share sale to augment its capital adequacy ratio and maintain liquidity to meet funding requirements of its business activities, it said in an offer document filed with the exchanges.

On September 14, 2020, rating agency Brickwork Ratings assigned ‘BWR A1+’ for the commercial paper issue while reaffirming ‘BWR AA+/AA’/Negative on the various debt issuances of Indiabulls Housing Finance Limited.

The rating reaffirmation factored in the company’s established market position in the housing finance sector, comfortable capitalisation with a moderate gearing level, strong liquidity and a diversified resource profile. However, the rating is constrained by the deterioration in asset quality and average profitability on account of the decreasing asset base and pressure on operating income.

“The outlook continues to be Negative, given the continued stress on asset quality due to the impact of COVID-19 on the domestic economy, pressure on profitability due to expected slippages in the developer loan book and resultant provision requirements. The company’s ability to revive growth and the improve asset quality and earnings profile through successfully building on the co-lending business model and avert any further deterioration in the portfolio performance over the near term will remain key rating monitorables,” Birckwork Ratings said in rating rationale.