HDFC was down 1.93% to Rs 1,226.70 at 10:44 IST on BSE after the company said it has assigned the outstanding loans in projects of Unitech Group to JM Financial Asset Reconstruction Company.
The announcement was made after market hours on Friday, 18 November 2016.Meanwhile, the S&P BSE Sensex was down 271.37 points or 1.04% at 25,878.87.
On BSE, so far 9,026 shares were traded in the counter as against average daily volume of 4.62 lakh shares in the past two weeks. The stock hit a high of Rs 1,252 and a low of Rs 1,223 so far during the day. The stock had hit a 52-week low of Rs 1,012 on 25 February 2016. The stock had hit a record high of Rs 1,463.25 on 7 September 2016. The stock underperformed the market over the past one month till 18 November 2016, sliding 7.46% compared with 6.78% fall in the Sensex. The scrip had also underperformed the market in past one quarter, declining 8.97% as against Sensex's 7.02% fall.
The large-cap company has equity capital of Rs 316.80 crore. Face value per share is Rs 2.
Detailing the rationale behind the move, HDFC stated that over the last three decades, it has funded various projects of the Unitech Group and that HDFC's current exposure to the Group involves funding of certain projects across various locations. In the recent past, the Unitech Group has faced sluggishness in the sale of apartments in its projects. This has affected the cashflows of the Group, which in turn has had an adverse impact on the progress of construction, and has resulted in irregular servicing of the loans. Under these circumstances, HDFC has assigned the outstanding loans in these projects to JM Financial Asset Reconstruction Company (JMFARC). All these projects are located in prime locations, are financially viable but require additional funding. JMFARC will arrange for funds to support and kick-start these projects. The progress of the projects and the resultant cash flows will thereafter be closely monitored.
Against the total dues of Rs 869 crore in respect of these projects, JMFARC has paid HDFC Rs 155 crore upfront and has issued security receipts (SRs) to HDFC amounting to Rs 705 crore which will be redeemable over the period of construction. Though these accounts were standard assets as at 30 September 2016, and turned non-performing assets (NPA) only at the end of October 2016, in view of the irregular payment history, HDFC said, it has over the last few quarters as a matter of prudence, made provisions amounting to Rs 240 crore in respect of these accounts. No further provisioning is required as a result of the sale of the loans to JMFARC. After considering the provision of Rs 240 crore already made (34% of the SRs) the net carrying value of the SRs will be Rs 465 crore.
HDFC's consolidated net profit rose 16.1% to Rs 2446.21 crore on 16.5% increase in total income to Rs 14526.69 crore in Q2 September 2016 over Q2 September 2015.
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HDFC is India's first retail housing finance company and is currently one of the largest originators of housing loans in the country.
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