Just a couple of facts based on your post. No personal opinion or comments on your view.
Why does the management declare huge dividend last year if more equity is needed?
Good question. The larger than normal dividend was declared as a reaction to the budget which imposes a tax on all those with dividend income greater than 10 Lakhs. I would say a disproportionately large number of companies did declare a larger than normal dividend , so nothing special about DHFL.
The warrants were issued for 2 reasons - a. To boost up CAR (Capital Adequacy Ratio) b. To increase promoter holding from 36%-40%.
By virtue of the business that DHFL is in, it will constantly need to dilute it equity in order to grow with a decent credit rating, all other financial companies do the same (Gruh being the only exception so far) So nothing special about this either.
Also issuing warrants send a positive signal to the market (as opposed to ESOP route of dilution / increasing promoter holding) implying the promoter is doubling down and putting more and more of his personal money at stake in the business. It is far more investor friendly than ESOPs and some would argue even an open market purchase (esp for a financial services company)
- And then issue warrants at cheap prices(relatively, considering CMP~Rs.220 and one more year left for conversion) for themselves.
Warrant pricing is not determined by management. It is determined by SEBI. Please see earlier posts for clarity on the same. Also just for the record at the time of warrant declaration the stock price was closer to 180-185. When warrants are declared (Correct me if I'm wrong on this number) a premium = 1/3 of the amount needs to be paid up front. Promoter could have instead bought shares on the open market at 180 instead of issuing warrants at 235.
Hope this helps.