(Bloomberg) -- Shares of DLF Ltd. plunged the most in almost three years after a newspaper reported that India’s top court is looking into whether the developer suppressed information about legal battles involving its biggest assets.
The stock dropped 15.8% to 144.45 rupees in Mumbai on Thursday. Its fall dragged down the S&P BSE Realty Index to its worst performance among 19 sector sub-indexes compiled by the BSE Ltd.
The Supreme Court issued a notice to DLF after a petition alleged the company didn’t tell shareholders about judicial proceedings against its largest land bank in the northern state of Haryana, the Hindu BusinessLine reported Thursday, citing official documents. The petitioner is asking that DLF return more than 50 billion rupees ($697 million) it raised via two share placements, one of which was this year, according to the report.
The development “is negative for the company, which might lead to a big penalty along with further legal inquiry,” said Sameer Kalra, Mumbai-based founder of Target Investing. “We have a sell rating on the company.”
The court’s inquiry is about a company that’s not a DLF subsidiary, Chief Financial Officer Ashok Tyagi told BloombergQuint by phone. Hence litigation pertaining to such companies did not require disclosure, he said.
The company will respond to the Supreme Court’s July notice in due course and is confident that its position will stand fully vindicated in the ensuing legal proceedings, DLF said in a filing to exchanges on Thursday.
DLF’s problems come amid a broader slump for India’s property sector, which is facing a demand slowdown. A series of economic shocks in the past years, from the unexpected withdrawal of high- rupee notes in 2016 to the sales tax introduced the following year, have dented property-market sentiment and caused funding for developers to dry up.
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