DHFL, Eros tumbles 52-week low after downgrade by rating agencies

  • On BSE at 9:50 am, shares of DHFL was down 10.93% at 99.40
  • Shares of Eros International Media Ltd also fell 20% to hit a record low

New Delhi: Dewan Housing Finance Corporation Limited (DHFL) tumbled 14% to 94.90 a piece on Thursday, after rating agencies Crisil and Icra downgraded the company from A4+ to D on Wednesday, citing delays in debt servicing.

The share of the company was trading at 52-week low on both NSE and BSE.

On BSE at 9:50 am, DHFL was down 10.93% at 99.40 while on NSE the scrip was at 98.75 slipping 11.63%.

The reported default by the non-banking financial company (NBFC) in paying interest on over 900 crore of bonds on 4 June led to this downgrade. Icra

“The downgrade reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) — not rated by Crisil — because of inadequate liquidity. The payments were due on 4 June," said Crisil in a report.

Rating agency Icra, on Wednesday, had also cut its rating for the fourth time this year on the company's paper to D from A4, implying that the company was in default or expected to be in default soon. Earlier, on 11 May, Crisil had downgraded its rating on DHFL’s commercial paper to A4+ from A3+, citing more-than-expected reduction in the company's liquidity because of further delays in fundraising from sell down of project finance loans and lower inflows from the securitisation of non-housing loans.

According to Crisil statement, DHFL has 850 crore of outstanding commercial paper (CPs) of which 750 crore is due in June 2019. The first CP maturity is on 7 June and with liquidity inadequate as on date to service debt and visibility very low on timely fundraising, Crisil said it expects the CP to be in default on maturity.

Meanwhile, shares of Eros International Media Ltd on Thursday also fell 20% to hit a record low after rating agency CARE had cut its long term bank facilities rating from BBB- to default after delay in debt servicing from banks.

The stock touched an all time low of 53.10 on BSE from its previous close of 66.35 a share. Year to date, the stock is down nearly 40%. On NSE, shares of the company was trading at 53.15 down 19.95%. On both the benchmark indices the stock has hit its 52-week low.

The company tapped a credit line of 750 crore through a combination of long-term and short-term bank loans, and other forms of bank credit.

“As per the management, the delays/default in debt servicing is on account of slowdown in collection from debtors leading to cash flow issues in the company," said CARE in a statement.

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