DHFL stock has held up remarkably well today. The promoters need to be given a chance to defend themselves, and the market seems to be doing that.
The action in DHFL bonds/NCDs seems to be more concerning though, if you are a stakeholder (I am not). Trading extremely weak today, you can get 18%-20% yield for a secured NCD maturing in 6-7 months (translating to a YTM of over 30%).
Lest this thread become cluttered with discussions over bonds/NCDs, I suggest let’s not discuss too much, each of us can follow the bond market on their own, if they wish to.
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Which series of bonds are u referring to which is offering these returns ?
I am talking about some of the ones maturing in Aug & Sept this year (N8 & NL). Trading around 920-925 today in big quantities, buyers will get around 1090 on maturity (approx figures). Even the longer dated ones have plummeted today, but I don’t track them closely.
Anyway, please DM for more information, I don’t think everyone on this thread will be interested in these discussions.
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As per this link, DHFL is selling non core assets and bringing in capital to DHFL from Wadhwan Global. Rest is all hogwash information. Has anybody attended Concall today?
That’s actually pretty much the summary of the call.
The major points were:
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Denying all allegations placed by Cobrapost. They said they’d like to come back with a rebuttal and maybe even a legal case. But they said they need time since the Asset sale is going on.
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Denied all connections / insider trading allegations. They said loans have been paid to some of the mentioned companies, but they denied the fact that they were Shell companies. They argued that these companies had done proper filings and hence Cobrapost had no grounds to call them that.
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Informed that Aadhar HF deal is in very advanced stage and we may expect an official news in a matter of days. This will bring Non-dilutive capital to DHFL.
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Finally assured that DHFL’S 3-decade experience will help them sail through this difficult phase.
After this, they took Q&A, where they answered the same points in detail. I also heard something along the lines of them specifically appointing a person to rebut the allegations. I’m not sure I heard right though.
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new news is MCA visited ten companies discussed in complaint to check authenticity and seems they didnt find any 
… some were empty building or something… hmmm its getting serious …
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Anybody who thinks that it is all clean here is living in fools paradise. It wasn’t without reason that it used to trade very cheap. I have heard that they promised institutional investors to clean up and behave well. Some bought their story including RJ while others stayed away. They might be on a right path offlate but past catches up eventually. Many promoters in India and not just alleged DHFL have indulged in money laundering/round tripping etc. These things are forgotten by the market when the underlying biz is rocking but folks awake after a bad spell in the business.
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Adding more from concall
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WGC offshore investments are regulated by RBI & WGC is not associated with any shell companies as such
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CMD has also denied the claim of donation to BJP
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DHFL has lent to a few companies mentioned by Cobra post & those are not shell companies the assets are mortgaged as security for money lent
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On liquidity front company receives 1800-2000 cr every month from EMI & hopes that it’s consistent going forward.
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Company plans to sell 10k crore worth project financing loans & is confident to complete it by March 19, apart from aadhar housing sale fetching 1500-2000 crores in a few days
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Company has also plans to sell non core assets in Life & General insurance and Asset Management business.
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Management has also clarified regarding moneylife article that there is no contingent liability for DHFL for debt at WGC levels.
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The maximum money lent to a single group entity is not above 2000cr as per guidelines
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Can you please share link where it is specifically mentioned that they have found empty building in place of address?
seems moneycontrol link isnt working but i can see entry in news & research section…
Might have been over eager reporting. Given the speed at which the media jumped at the story, I am surprised such important findings have not made it to written news yet.
With due respect to the DHFL management, I feel their primary focus should be on the rebutal and not the asset sale. Unless they prove beyond reasonable doubt that they are not involved in the scam, atleast not to the extent alleged by cobrapost, things will go downhill for DHFL pretty fast. No bank will be willing to roll over their debt. Investors will not want to subscribe to DHFL NCDs. A severe liquidity crisis would become inevitable.
Disclosure - Sold today and booked a 30% loss. Invested the proceeds in DHFL NCDs with residual maturity ranging between 6 months to 2 years at a YTM of 20% to 36%. I feel the DHFL secured NCDs with first charge on assets (most of which are retail mortgages) at such high yields offer a much better risk adjusted return compared to equity.
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Not to sound like a broken record, but before buying the stock, investors can look at secured NCDs, since they are really weak today as well. In fact, VERY weak.
For example, approx 7 month maturity NCD is yielding around 25%. That is around 45% YTM.
Longer dated bonds also plummeting again today. One could say they are priced for a small ‘haircut’.
Pretty good risk-reward ratio if you are optimistic about the company. Of course, stocks are like a call option on the company, so can be much more rewarding if there is a blue sky scenario going ahead.
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I’ve never understood why people move up the capital structure of a significant fraud situation (e.g. sell stock, buy NCDs). Just get out. Few people know the size of the real hole in DHFL’s Balance sheet. The cockroach theory applies. The size of haircut is anybody’s guess. So the implied YTM is meaningless when you don’t know the size of the fraud in a significantly levered entity.
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yea absolutely.
i am just thinking about the consequences and worst-case scenario by making a ‘what if’ case by assuming the allegations are true :
- what is the maximum punishment the promoters will suffer and how it will affect the company ?
- Does company become a potential takeover candidate in such a scenario, given its attractive valuations ?
Summary
I am not sure of the empty buildings found by MCA as mentioned…
but one of the Non-promoter holdings is Silicon First who hold 3.22% in DHFL, their address is the same as that of other companies whom DHFL has given a loan (as mentioned in the report).
Director in Silicon First is also a director in Earnet Homes Pvt Ltd and Waterfall Infra. He is shown as the past director in Valencia Builders Pvt Ltd and Valencia Developers Pvt ltd… address of Earnet Homes and Valencia Developers is the same. ( infor available on www.zaubaCorp.com )
All these companies are shown as beneficiaries of the loan taken from DHFL and all these companies somehow link back to the Galaxy, Hemisphere and Silicon.
Also the address of Waterfall Infra and other companies is the shown as the same as that of an advertising company.
And I won’t be surprised if the directors in all the above companies are employees in some of their smaller firms or related companies.
All these reeks of so much of wrong doings… it won’t be a surprise if by the time the truth comes out, where will the share price be… ???This text will be hidden
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Appreciate such painstaking research on holding, addresses,borrowings and sharing these.
You say “…somehow link back to Galaxy,Hemisphere and Silicon.”
Can you clarify on this?
DHFL has clarified to the exchanges that it has not received any communication from MCA.
The clarification is available on bse & nse websites.
If you just check on Zuabacorp.com… the name of directors in the DHFL holding companies, the various companies they hold and then check the addresses, which are similar in many cases… we come to know that all the 3 mentioned holding companies are inter-linked with each other.
And if the report of loans given by DHFL to these companies is true, as mentioned in post, then it clearly looks like the whole thing stinks.
The company gives loans to these pass-thru companies, which in turn gives money to the shell companies and they buy back the shares of DHFL at a premium, thus artificially increasing the share prices.
Is it possible for us to get the complete details with names and reports of loan given by DHFL to non-retail and Corporate bodies. This report can give a lot of clarity to all the allegations.
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