Dewan Housing Finance share price rises nearly 7% after lenders agree to restructure outstanding loans

Dewan Housing Finance share price rose in early trade today after lenders of the firm agreed to restructure the stressed home financier's outstanding loans of more than Rs 38,000 crore. Dewan Housing Finance share price rose up to 6.91% to Rs 80.50 compared to the previous close of 75.30 on BSE.

Dewan Housing Finance share price has been gaining for the last three days and has risen 10.26% during the period. Dewan Housing Finance share price has fallen 87.30% during the last one year and lost 68.20% since the beginning of this year.

Dewan Housing Finance share price was trading below its 50-day and 200-day moving average of 96.24 and 146.26 levels, respectively. Dewan Housing Finance's market capitalisation stood at Rs 2,491  crore on BSE.

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At 11:23 am, the share price was trading 5.38% higher at 79.35 level on BSE. The banks have decided to sign an inter-creditor agreement by Friday after DHFL missed interest payments to a few lenders last month.

After the agreement is inked, DHFL will have to submit a resolution plan. The restructuring plan being prepared under the Reserve Bank of India's 7 June circular, is likely to include extending the tenure of loans, conversion of debt into equity, fresh working capital and inducting a new management team and financial investors.

On June 28, the firm deferred its earnings announcement to July 13, 2019. Earlier, meeting of board of directors of the company to consider and approve the audited financial results (standalone & consolidated) was scheduled to be held on June 29.

The non-banking finance company has been facing liquidity crisis and has recently defaulted on its repayment obligations. The company has resorted to various modes of fund mop-up including selling stake in subsidiary firms to meet its debt obligations.

On June 26, Dewan Housing said it had only been able to make a 40 percent payment on unsecured commercial papers due on Tuesday, but vowed to pay the remaining Rs 225 crore ($32.49 million) in the coming days.

Two major credit ratings agencies - ICRA, an affiliate of Moody's, and Standard & Poor's local unit Crisil - earlier this month categorised DHFL's commercial paper at default levels for missing bond payments. Dewan Housing said in a regulatory filing it would make the outstanding payment in the next few days "once the surplus cash flow position improves" and stressed it was vying to turn the corner.

"The company is already in the process of selling down its loan assets including wholesale project loans to make good all its obligations and maintain its 100% commitment to all its creditors as it has done since the liquidity crisis started in September 2018," DHFL said.

DHFL also missed certain payments on bonds due in early June. The problems facing India's non-banking financial companies have piled additional pressure on Prime Minister Narendra Modi, who won a strong election mandate last month, even as the economic growth slipped to 5.8% in the January-March quarter, marking the lowest GDP growth rate in more than four years.

Edited by Aseem Thapliyal