ICRA Downgrades Dewan Housing Finance, Shares Plunge 8%

Shares of Dewan Housing Finance Corporation plunged as much as 8.2 per cent on Tuesday, a day after ratings agency ICRA cut its rating on the company's commercial papers. DHFL shares opened lower at Rs 130.50 apiece on the National Stock Exchange (NSE) and plunged to an intraday low of Rs 125.45 in morning, from their previous close of Rs 136.75. On Bombay Stock Exchange (BSE), the DHFL shares opened lower at Rs 131.00 apiece and slumped to an intraday low of Rs 125.45, from their previous close of Rs 136.70. That marked the biggest intraday percentage drop for the company since February 8, according to news agency Reuters.

The stock has lost 45 per cent of its value this year as of last close, after shedding 57 per cent in 2018, Reuters reported. At 11:06 am, Dewan Housing shares traded 7.90 per cent lower at Rs 128.85 on the NSE. On the BSE, the stock traded down by 7.20 per cent at Rs 129.50.

According to a press release issued by ICRA on Monday, the credit rating agency downgraded its rating on Dewan Housing's Rs 8,000 crore ($1.12 billion) worth commercial papers(CP) to "A2 plus" from "A1 plus", citing the company's ability to raise funds and generate new business. "As on date, DHFL has CP outstanding of Rs 1,525 crore. The company has indicated to ICRA that it shall buyback substantial portion of this amount over the next one month," the release said.

"The rating was for outstanding commercial papers of only Rs 1,525 crore out of a rated amount of Rs 8,000 crore, which forms less than 2 per cent of the company's outstanding borrowings," Dewan Housing Finance said in a regulatory filing on Monday. "This action comes barely three weeks after the company was downgraded and kept on watch by all the rating agencies," it said.

Meanwhile, both the benchmark indices Sensex and Nifty declined as much as 1.3 per cent each on Tuesday amid geopolitical tensions.

(With inputs from Reuters)