India Lender Shares Hit Six-Year Low as Lending Grinds to a Halt
DHFL was among the worst hit in the wake of default by Infrastructure Leasing & Financial Services Ltd.
(Bloomberg) -- Dewan Housing Finance Ltd. plunged after the Indian shadow lender posted a quarterly loss and flagged doubt about its ability to continue as a going concern amid a funding crunch in the country’s credit market.
The stock slumped 29% to 48.5 rupees in Mumbai to the lowest close since October 2013, after briefly crashing 33% in intraday trading. The embattled lender seen its market value erode 81% this year, compared with the 11% gain in the S&P BSE Finance Index.
The Mumbai-based lender was among the worst hit in the wake of default by Infrastructure Leasing & Financial Services Ltd., which drove up financing costs and made it harder for non-bank financing companies to access funds. DHFL, which has about 800 billion rupees ($11.7 billion) of obligations, is in talks with lenders to restructure its debt and is looking for a strategic partner to help fund an equity infusion, it said in a filing Monday.
The company posted a loss of 22.2 billion rupees for the March quarter, versus net income of 1.34 billion a year ago, according to the filing. That would be its first loss in data going back to June 2008. It will take “active steps” to sell assets and is in discussions with multiple Indian banks and global financial institutions to dispose its retail and wholesale portfolios.
Read a BloombergQuint report on questions Dewan’s earnings raises
The company marked down the value of 348 billion rupees of loans, including 165 billion rupees of checks it collected from borrowers but didn’t cash them.
DHFL said it has met with the consortium of bankers who have agreed to enter into an inter-creditor agreement for a potential restructuring of its liabilities. It’s in the process of submitting a resolution plan to the lenders, who are expected to give in-principle approval to the plan by the end of July.
To contact the reporter on this story: John Xavier in Mumbai at jxavier20@bloomberg.net
To contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Anto Antony, Ravil Shirodkar
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