Look who got trapped in DHFL! HNI, retail investors hiked stake to highest in June quarter
DHFL shares have eroded more than 91 per cent of their value since September 21, 2018.
Data from Ace Equity showed while foreign institutional investors cut their holdings in the mortgage lender by 639 basis points (bps) to 11.26 per cent in June quarter – lowest in 41 quarters – and mutual funds lowered theirs to a mere 0.02 per cent from 1.09 per cent –lowest in 67 quarters – retail and HNI investors upped their holding in the company by 587 bps to 33.76 per cent – highest in at least 67 quarters.
“They are trapped,” said Deven Choksey, group managing director at KR Choksey Investment Managers.
DHFL shares have eroded more than 91 per cent of their value since September 21, when DSP Mutual Fund sold non-convertible debentures (NCDs) of DHFL at a higher yield, signalling stress in the company.
“Unfortunately, investors relied on the statements that the company filed with stock exchanges from time to time. None of these statements reflected any of the negative that became public in subsequent period during earnings announcements,” Choksey pointed out.
Earlier this month, while announcing its results for the quarter ended March, the company said its financial situation was so grim and that it might not survive.
The company said it was "undergoing substantial financial stress" and its ability to raise funds was "substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements."
"These developments may raise a significant doubt on the ability of the company to continue as a going concern," it said in notes accompanying fourth quarter earnings.
The company also posted biggest ever quarterly loss of Rs 2,224 crore for March quarter. “This is the usual trend whenever some popular share falls, you see institutions getting out, due to better understanding of the markets, and compliance and corporate governance obligations,” Gaurav Dua, Head of Research at Sharekhan.
“On the other hand, retail has their buying decisions are influences by recent past. They also normally catch these stocks thinking they can make big money expecting quick bounces,” he said.
On Monday, ET reported that DHFL may propose this week a six-month moratorium on repayments of around Rs 80,000 crore of outstanding loans under the inter-creditor agreement, with private equity investors likely buying a fifth of the embattled home financier after the debt recast.
During moratorium, DHFL would only pay the due interest on outstanding bonds, sources told ET.
The company expects a slightly longer moratorium on principal repayments, said an executive with direct knowledge of the matter. DHFL is also negotiating longer loan repayment tenures of up to 3 years with its bankers, ET reported.