Indiabulls Housing Finance erase gains and plunge up to 14%; what investors should do now

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Published: November 29, 2019 3:39:37 PM

Indiabulls, Indiabulls Housing Finance, bonds trade, Market news, OTC, trade data,CRISIL, NSE, BseGagan Banga, vice chairman and managing director of Indiabulls Housing Finance, told FE that he believes these were freak trades.

Shares of Indiabulls Housing Finance erased gains on Friday afternoon and plunged up to 14% after Delhi High Court adjourned Citizen Whistle Blower Forum PIL against it to Feb 28, 2020. Earlier, Indiabulls Housing Finance shares had gained as much as 13% to hit the day’s high at Rs 376.80 on BSE, after it got a clean chit from the MCA (Ministry of Corporate Affairs) and the government affidavit filed in Delhi High Court said it did not find any irregularities in loans given to five companies.  The shares closed at Rs 289.80 on BSE. The petitioners of the PIL had alleged that the loans were given to shell companies by Indiabulls Housing Finance. The company had refuted the allegations in the court and had submitted documentary proofs and bank statements to prove its stand with regard to the loans. Subsequently, the Court had issued a Perjury Notice to the petitioners, the company said.

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Check live stock price: Indiabulls Housing Finance

Taking stock of the wild swing in the stock, Sanjiv Bhasin of IIFL Securities noted that the stock has seen a massive run-up in the recent times given FPI interest, and the MCA’s clean chit. “The stock has seen a massive run-up in the recent times. There has been investor interest from FPIs,” Sanjiv Bhasin, Director at IIFL Securities told Financial Express Online. Notably, the shares had zoomed nearly 40% in the last two days after foreign portfolio investors (FPIs) bought nearly 1% stake in the company through open market operations. The stock of the housing finance company had zoomed 25% yesterday, after Government Pension Fund Global had bought 3.1 million equity shares, representing 0.73 per cent stake, in Indiabulls Housing Finance for Rs 95 crore on the NSE, bulk deal data showed.

According to the expert, a lot of good news had already been priced into the share price. “So, today investors had resorted to some profit booking. They had already been buying on rumour, and hence sold after today’s news,” Bhasin added. Interestingly, global brokerage firm CLSA has raised the target price on the stock. It has raised the target price to Rs 450. “Clarity can improve the company’s access to the debt market, aiding liquidity and growth base case continues to assume marginal growth till FY21. A 200 bps higher loan growth can lend a 3 percent earnings upside for the company in FY21,” CLSA said in its report. According to the global firm, the current valuation is attractive while risks are receding on court cases. An uptick in growth can drive rerating, CLSA added in its report.

(Please consult your financial advisor before taking any investment related decision)

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