I have seen couple of friends lost a fortune in this counter …
With the current P/E ratio and dividend payout ratio people might consider it as a value pick …
I have one question, we all know market is supreme and market is valuing this company at such low valuations …
Meaning : there is something seriously wrong in this counter…
Otherwise if the company fundamentals are strong enough it should reflect the price…
If not then there is something seriously wrong which we are not aware especially in Indian stock market context where corporate governance has become a joke …
I think market is considering merger with Lakshmi Vilas. Indiabulls has valued it at very high price. Its a loss making entity with NPAs around whopping 17%
In the current scenario looking at P/E and dividend yield will be helpful only if you think that the business will exist a few quarters from now. Looking at the overall pessimism, the market may be of the opinion that this business is shutting down. There’s no way to prove that this cannot happen. But I do believe that the Management team has seen such situations in the past and have the depth to come out of it.
News such as this indicates that survival has taken over the driving seat and profitability etc will come later.
I dont think this should be taken in a positive sense. No promoter would like to cede control of their business until its a do or die situation. They are doing everything to get merged and get banking license at the cost of letting go business which they build over the years.
They would become minority shareholder with no saying in anything.
Was actively looking at banking license development and merger but this news I think is negative.
Does India Bulls Housing taken the ‘Fit & Proper’ nod from Bank of England and RBI before buying 38% odd stake in Oak North Bank.Does anyone has any info.
The company’s main business is financing by way of loans for purchase or construction of residential houses, commercial real estate and certain other purposes.
“As we await the regulatory decision on our merger application, which I expect in the next 45 to 60 days, we are focused on incremental loan book growth coming from MSME/LAP loans and housing loans,” IBHFL Vice Chairman and MD Gagan Banga said.
Indiabulls has promptly cleared all speedbreakers by providing proof on time. It was quick to provide a complete list of borrowings when Mr. Swamy accused the company of misappropriation. As I had posted before, they have prepared well for the second battle for a banking license.
Moody’s downgrades Indiabulls Housing Finance rating from Ba2 from Ba1. It also changed the outlook to negative from stable. Both, Ba1 and Ba2 are junk grade (non-investment grade).
My opinion: Business is definitely in stress. Company has Higher NPAs now and its cost of funding is higher. Company is dependent of real-estate, where unsold inventory is huge and properly price as well as volume are down. Also, I personally know of 2 recent cases involving my colleagues where IBHF didn’t honour their initial loan approval and didn’t disburse the loan.
A low stock price is reflecting all this stress. So risk-reward ratio is reasonable. If the company survives this phase (next 2 to 4 quarters) and doesn’t default on debt (like DHFL did) then the company will flourish. Just normalisation of P/B ratio will double or triple the stock price. But ownership during this phase of 2 to 4 quarters could be gut wrenching as more negative news will be coming which could further hamper the stock price during this phase.
My long term investment rationale on Indiabulls Housing - The company is agile in approving and disbursing the loans. They also give Loan against property (LAP) and to projects (Commercial and Residential). India has low home ownership and emotionally Indians prefer to own a home. The government has been and will be encouraging home ownership and hence its policy will be supportive. So there is a huge market. Buying Home is a high ticket item and purchase needs funding in most of the cases. But there is high competition intensity in this industry. There are more than 50 HFC and a lot many banks. Banks could afford to charge low interest rates due to their cheap cost of funding and this is a disadvantage to HFC. Indiabulls Housing is trying to overcome this by becoming a bank (sadly by merging with very high NPA bank). If they get approval for merger by RBI (first if) and overcome NPAs (second if), then they will emerge as strong player in Housing Finance industry.
Yet another PIL was filed against the Co (came out on social media late yesterday night). As expected IBHF has denied the allegations and said they’ll fight it out in court. Unlike the previous PIL in June, this one seems better researched at least on paper. Looks like somebody is really out to get em !
Disc : Was invested but exited at a small loss last month. No holdings now. Difficult to remain invested in a stock when newsflow dominates over fundamentals. Also, Subramnian Swamy getting involved could mean that this gets dragged on for a long time.
Swamy barred from spreading propoganda against IBHFL. I had speculated previously that since Indiabulls has lost its license bid once, it has prepared itself well this time.
I think Indiabulls is no doubt cheap on current valuation. But off late I have decided to avoid investment in certain corporate houses and Indiabulls is one among them. I agree that in India it might be difficult to get totally clean management but one need to make difference between management which can go any length to defraud minority investors, general public interest and misuse their political connections.
There is very much possibility that it might go up 50% from current levels if euphoria comes back to market or progress on power plants continues, but I will definitely avoid this.
This a June 2013 Post of Valuepickr Forum under thread Indiabulls power.
One of the forum member had casted doubt on the Corporate Governance 6 years back.
