Has anybody done any calculation on what would be the value of DHFL once DHFL settles their entire outstandings after they sell down all their loans…
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Nice positive ALM buckets for 7 day, 15 day etc with undrawn bank lines can be shown but a liability maturing on day T satisfied only by a matching asset maturing on date T+1 is called a default, and that’s as fragile as a baby holding a Chinese vase. Just one error away from collapse.
Liability funding is not the same as liquidity cushion. For the scenario you described, companies keep an adequate liquidity cushion - and there’s always the overnight market to borrow from to meet such urgent requirements.
ALM has become a very advanced science using predictive models and years of experience behind it.
If you have accelerated clauses in FDs and NCDs that triggers payment of Principal and Interest with little notice, the L in ALM become inherently uncertain. That was the case in DHFL too. They continued to show positive ALM in large time buckets. The A in ALM is not triggered likewise, in this case. So no amount of science can help what is largely uncertain. You can keep cash cushion, but may not be sufficient, like a run on the bank. Which is why I said an L maturing on day T satisfied only by A on T+1. That was the case in DHFL, as they did not have cash.
?? An NBFC cannot participate in these markets. Only Banks and Primary Dealers can.
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1a739a44-fdab-4270-a652-5e871a646b14.pdf (373.7 KB)
Aadhar housing sale has gone through today, hopefully DHFL can tide over interest payment
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I received the interest for DHFL NCDs in my bank account on Monday morning.
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Isn’t DHFL victim of the same person Vikas Shekhar who is after Indiabulls housing right now?
On a seperate note, is DHFL still disbursing new loans or is their business at a standstill?
Kapil wadhwan has himself said in interview that they are not disbursing (indirectly) if i remember correctly . They don’t have enough liquidity to pay back borrowers currently so disbursement is out of question. Some scuttlebutt even suggests that most of their existing clients loan disbursed or otherwise are now switching to hdfc
DHFL is in portfolio of RJ. Being monitored by Analyst and Rating agencies. It was one of the largest Housing Finance Companies.
This means people were reading the Results, Annual reports and meeting management. There was lot of information available in market about this Company.
Everyone has telling Rosy stories about NBFC after recent run by them couple of years back.
So does people tend to overlook facts or ignore it. Does it mean there is no point analyzing too much into numbers reported by Companies?
Can anybody confirm when is the next date of big payment? September?
When can they start raising funds again via FD’s and from banks to restart business?
I think this is truer only for Financial firms. Even Warren Buffett has at times admitted that he doesn’t fully understand what’s going on in the books of the banks he’s invested in. Due to the highly leveraged nature of financial institutions, even a small slip up can have a magnified impact.
Financial institutions have among the highest growth rates and longest revenue visibility. But the risk is that nobody fully understands their business down to the last nail. It’s a part and parcel of the gamble.
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Rating will be in default D for 90 days…Until the rating agencies wish to change it. Raising cash is tough other than securitization. Let’s hope for changes after new management comes in.
Yeah pretty much sums it up.
There is no need to over analyze a Stock or Company. Simplify investment strategy.
That was not my conclusion. I’m saying, even if you have the capability to analyze all public data, the risk in banks is such that it will invalidate all the analysis. And that high level of risk comes with high levels of growth and huge Competitive Advantage periods. The risk and the reward are both high in a bank/NBFC.
The same cannot be said about a manufacturing or services firm, in my opinion.
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From prof Bakshi, applicable to NBFC with an even more higher return. https://fundooprofessor.wordpress.com/2015/04/16/when-you-buy-a-bank/
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Yesterday there was a news that 20% stake will be picked up by strategic partner at $1 billion, though the company denied any concrete agreement, Kapil in his latest interview said he’s looking at 7k-10k cr of equity infusion by strategic partner. Assuming 20% stake for strategic partner by infusing 7k cr( $1billion as per yesterday’s news)
What would be the fair value of the company as a whole ?
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I think it should be Rs700cr and not 7000cr for 20% considering 100% is a available at 2,800cr and the entity is distressed. I don’t remember anytime that Dewan was valued at Rs35,000cr to buy 20% at Rs7,000cr
company’s filed intimation
@SlownSteady , check this interview https://www.dailymotion.com/video/x7ahyzg
MD says, Equity infusion expected around 7kcr to 10kcr. ‘Assuming’ yesterday’s media news that strategy partner will take 20% stake for $1billion I am trying to understand the value of the company