Why Dewan Housing Finance share price fell up to 15% in early trade today

Dewan Housing Finance Corporation (DHFL) share price fell in early trade today after domestic rating agencies Icra and Crisil on Wednesday downgraded rating on Rs 850 crore worth of commercial paper of DHFL to 'default' from 'A4' due to the mortgage lender's deteriorating liquidity condition.

Dewan Housing Finance Corporation share price fell 14.96% or 17 points to 94.90 level on BSE. Dewan Housing Finance share price has been losing for the last two days and has fallen 12.59% in the period.

The stock opened at a loss of 10% to 100.45 level in trade today. Dewan Housing Finance share price has lost 83.68% during the last one year and fallen 60.36% since the beginning of this year.

The rating of the company, which defaulted on a debt repayment earlier this week, has been removed from watch with negative implications by both the rating agencies.

ICRA, Crisil give lowest rating to DHFL's Rs 850 crore commercial paper

Crisil, in a note, said the downgrade to 'default' or 'D' reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) because of inadequate liquidity. The payments were due on June 4, 2019. The NCDs are not rated by Crisil.

In a separate note, Icra said, "The rating revision factors in further deterioration in company's liquidity profile and delays in meeting scheduled debt obligation on June 04, 2019."

Icra added that given the stretched liquidity profile and limited visibility on fresh funding, the company is unlikely to be able to service its debt obligation with regard to commercial paper programme in a timely manner. The company has commercial paper (CP) worth Rs 750 crore maturing in June 2019 with the first repayment on June 7.

"With liquidity inadequate as on date to service debt and visibility very low on timely fund raising, we expect the CP to be in default on maturity," Crisil said.

Edited by Aseem Thapliyal