INSUBCONTINENT EXCLUSIVE:
NEW DELHI: It all re-started with the downgrading of a Rs 1,866 crore loan facility of realty developer Supertech by rating firm Brickwork,
amid reports that the builder defaulted on loans to Corporation Bank and Syndicate Bank
The realtor says it has not defaulted on any of its loans.
The news triggered panic on the NBFC counter
Investors were caught in a similar situation last month when defaults mounted at infrastructure financier ILFS.
Shares of NBFCs, mainly
those of home financiers such as Indiabulls Housing, DHFL and Repco Home, took a heavy beating on Wednesday
Supertech has a total debt of Rs 2,000 crore
Indiabulls Housing alone has Rs 600 crore exposure to two of Supertech projects.
Data showed NBFC funding to real estate developers
increased 35 per cent compounded annually between FY16 and FY18
Brokerage JM Financial said a recurring operating deficit and material increase in leverage meant a major portion of the funding by
developers has been utilised to meet construction costs as well interest outgo on existing debt.
Some analysts fear either more developers
may default or there could be a spike in retail non-performing assets due to delay in project deliveries.
Here is how ratings of some of the
well-known real estate developers stood at last count
(Source: JM Financial)
Supertech IB Housing clarifyIn case of Supertech, Brickwork said it had to rely upon audited financial results up to
FY17, and projections up to FY19
The rating, Brickwork said, was constrained by cash flow mismatches due to slowdown in real estate industry, leading to liquidity problems
being faced by the company.
Indiabulls Housing Finance on Friday morning said its portfolio comprises only leading developers in the metro
There is no project where the company is a sole lender, the company said.
Besides, the NBFC insisted, a majority of its portfolio is backed
followed by one from Supertech, which said its account with Indiabulls Housing is regular and standard and the company is servicing housing
Arora said his company has not defaulted on any interest payment
The reason could also be a short-term liquidity crisis
The project may be still very good
HDFC.
RBI booster fails to lift stocksTo deal with liquidity crunch at NBFCs, RBI on Thursday allowed banks to use government securities
equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit, to meet liquidity coverage ratio
reduced bank CD issuances in the system
Now, this additional 0.5 per cent allowance given to NBFCs and HFCs on an incremental basis would mean the release of close to Rs
55,000-60,000 crore of additional liquidity from the banking system to NBFCs
Consulting, noted that housing finance companies are largely consumer-oriented
HDFC has the maximum, 20-25 per cent loans, to builders and companies
As for projects that are in limbo, I am worried that people have been paying the EMIs so much so far that at some stage they will refrain
It is just the little niggle worry about what is going to happen to the portfolio of loans advanced to unfinished projects
I think it is safe and sound
There is no liquidity issue
TCG AMC believes investors should stay away from NBFC stocks at this stage, as the whole problem started only sometime last month and
NBFC stocks have traded at very high multiples in the past
Even now, after the correction in the multiples is still fairly not cheap enough, Lokapriya said
At 2.30 pm, the stock of Repco Home was down 9.5 per cent at Rs 309.05 on the BSE
This was the fourth consecutive day of fall for the stock, which has fallen 18 per cent during the period
Similarly, shares of Dewan Housing Finance fell today for the fourth day running
The stock has come off 28 per cent during the said period
Indiabulls Housing has cracked 29 per cent in three sessions to Friday
Big players such as LIC Housing and HDFC have come down 4-5 per cent in the last 2-3 sessions.
