HCC shares slump 15% on report of possible Lavasa bankruptcy1 min read . Updated: 22 Mar 2018, 12:29 PM IST
HCC shares slump 14.87% to Rs24.60 on BSE after reports that its arm Lavasa may turn bankrupt
Mumbai: Hindustan Construction Co. Ltd (HCC) shares slumped over 15% on Thursday, its biggest fall in 16 month, after a report that its arm Lavasa Corp. Ltd may turn bankrupt.
HCC shares fell 14.87%, its steepest fall since November 2016, and touched a low of Rs24.60 a share. At 11.15am, the stock was trading at Rs25.60 on BSE, down 11.3% from its previous close. So far this year it declined 38% while BSE Realty Index fell 11%.
“The Lavasa management is planning to declare bankruptcy and is likely to approach the NCLT by the end of this month i.e, March 2018. The funds-starved company is finding it difficult to manage day-to-day operations and has started resorting to selling non-core equipment to raise money and meet immediate expenses," reported DNA.
“Besides, the pressure is also building from people who had bought apartments/villas many years ago to refund the money as they have not been given a possession of their respective assets," the report added.
As of September 2017, total standalone debt of HCC stood at Rs3,672 crore.
Real estate sector is under pressure from last few years as developers unable to sell their inventories due to weak demand conditions.
A January report by Knight Frank India showed that home sales volume hit a seven-year low in 2017, seeing a 38% decline from the peak of 2011. Home launches, too, saw a sharp fall of 78% last year to 103,570 housing units from 480,424 in 2010.
In February, India Rating has maintained its negative rating on the sector and expects muted sales and margins to remain under pressure owing to a rise in input costs and an increase in selling and promotion costs amid weak demand conditions.
“This would lead to an increase in the inventory and debt levels of real estate firms in FY19. Refinancing risk remains at an elevated level owing to weak credit profiles. The quality of inventory would be the key differentiating factor for companies in this sector to determine their relative refinancing capability," according to the India Rating report.