Indiabulls Housing Finance Seeks SEBI Approval For Buyback Plan
The board will take a final decision on this proposed buyback upon receipt of confirmation from SEBI.
Indiabulls Housing Finance Ltd. on Monday said its board intends to go for a buyback of shares and will take final decision in this regard after receiving concurrence from market regulator Securities and Exchange Board of India.
"The board is inclined for a buyback of shares, the route being the buying of company shares through the exchanges and shall take final decision on this proposed buyback upon receipt of confirmation from SEBI," Indiabulls Housing Finance said in a stock exchange filing said.
According to statement, based on legal advice received on buyback, the board thought it prudent to first confirm with the SEBI on the applicability of the debt-equity ratio of 6:1 as currently prescribed for subsidiary non-banking financial firm or housing finance company.
While deliberating on the proposed buyback, the board in its meeting held on Monday noted the present market value of the company is at a steep discount to its historical valuation multiples.
It also noted that the company's financial position is very strong and its capital levels are high.
The company's capital adequacy of 27.8 percent as at the end of June 2019, is the highest among all non-bank finance companies of size. The average capital adequacy for non-bank financiers with balance sheet size of greater than Rs 1 lakh crore is 18.7 percent.
The company has been maintaining high levels of liquidity and has about 20 percent of its balance sheet in cash and liquid investments, this compares with an average of 5 percent for NBFCs of size, thus the company is holding four times the average liquidity of the sector, it noted.
The buyback, it said, represents excellent use of the company’s capital, given its high capital adequacy ratios and liquidity.
The promoter informed the board that neither he nor any of his promoter companies intend to participate in the buyback, it added.
The company and its management best understand the underlying business mechanics and the value in the business, it also said.
"The market value has been severely dented following circulation of rumours and false allegations against the Company. The charges are false and malicious and the Company is completely innocent of these charges," it added.
The board noted the adverse impact on the share price following the circulation of rumours, fake news and unfounded allegations in social media, and the reproduction of these allegations in a public interest litigation filed against the company concerning loans to leading developers extended in the normal course of the company's business as a housing finance company.
The board directed the company to double-down on legal efforts to effectively counter these malicious attacks and also to explore complaining to regulatory authorities to investigate build-up of short positions coinciding with the circulation of rumours and false news about the company.
The board also advised the company to continue with its policy of paying 50 per cent of profits as dividends, as has been the practise for the last 10 years. The board noted that the company is one of the top 10 dividend-paying companies in India, having paid Rs 10,530 Crore (Rs 271 per share) in dividends over the last 10 years.