Dewan Housing Finance Corporation - DHFL

Alchemist

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#1
DHFL is again down 15% today.

Many of its bonds are trading at 25% discount on NSE.

I am not sure about the situation in the main debt market, but it seems the market sees some truth in Cobrapost's allegations.

If DHFL is to collapse, the collateral damage will be widespread.

As of now, the stock market is neglecting that factor.
 
#2
I own this stock and am confused now between averaging @ 50%, selling what I hold (which doesn't make sense to me). I doubt DHFL will collapse, since that would mean them recalling all loans they have lent out (except retail). Might average if it goes down further though.
 

Alchemist

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#3
In my opinion, one should not buy any stock where the integrity of management is being questioned.

I am not sure of the price at which you have purchased the stock, but if I were in your place, I would exit at the first technical bounce that I get.
 
#4
I am holding DHFL bonds in June 2018 and maturity in June 2028. The CMP is 40% less than the issue price. The NCDs are secured? How much is the risk? Should I sell at 600 or buy or just hold on whatever I have?
 
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Alchemist

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Staff member
#5
I am holding DHFL bonds in June 2018 and maturity in June 2028. The CMP is 40% less than the issue price. The NCDs are secured? How much is the risk? Should I sell at 600 or buy or just hold on whatever I have?
The NCDs are secured, but I am not sure what the security is.

My feeling is that the market is overreacting to the news.

However, I won't suggest averaging or buying DHFL shares/bonds now.

Hold the bonds for now.

(Even I am holding 49 bonds of DHFL with maturity date in 2021.)
 
#8
I am still holding the shares in DHFL, though the price has been eroded quite severely. Thankfully it is less than 10% of my portfolio but am hoping the sale to strategic investor happens at a premium (Rs 250 odd) which will mean the stock should see that price level.
 
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#9
There is default by DHFL and bonds are trading at less than 50% of the value. Not sure what would happen to bonds. DHFL bonds is about 30-40% of my portfolio. Any idea what can happen to DHFL bonds now?
 
#10
Finally got the interest after 6 days of delay. But I am worried as the bonds have still 9 more years and do not know whether DHFL would exist after 9 years.
 

Alchemist

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Staff member
#11
Can you tell me the ISIN of the bonds that you are holding?

My father has 49 bonds of DHFL 2021 bonds.

He also has some RHFL bonds. Even though RHFL has still not defaulted, there is a possibility that it will in future.

I was lucky enough and was able to sell RHFL's 2032 bonds at Rs 750 each and buy 2022 bonds for Rs 650 each.

I don't think that is possible in case of DHFL as the longer duration bonds are at a discount compared to the shorter duration bonds.
 

Alchemist

Administrator
Staff member
#13
For now, I suggest you hold the bonds. There is a possibility that DHFL will get taken over by a stronger player and thus will survive.

For fresh deposits, stick to bank deposits and government/post office products. If the malaise spreads, even good NBFCs will suffer.

The balance sheets of IL&FS, DHFL, ADAG Group etc are huge and it is unlikely that any financial institution will remain unscathed if these companies collapse.
 

Alchemist

Administrator
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#14
DHFL has reported a loss of Rs 2243 crore this quarter.

The main factor responsible for this loss is Rs 2550 crore loss included as "Net Loss on fair value change".

The explanation given by the management:

Due to the current business environment, the Company no longer holds the project loans, SRA loans and wholesale mortgage loan portfolio for the purposes of solely collecting the principal and interest. The Management envisages to monetise the wholesale loan portfolio. Consequently, the said loans aggregating Rs. 34,818 crore (including Rs. 16,487 crore related to note 9) have been reclassified as Fair Value Through Profit or loss (FVTPl) as at March 31, 2019 due to the change in business model. As required under Ind AS 109, these asset have been fair valued as at March 31, 2019 based on internal valuations which involve management's judgment and assumptions at Rs. 31,628 crore and the resultant fair value loss aggregating Rs. 3,190 crore has been charged to the Statement of Profit and loss
 
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