Indiabulls Housing Finance Limited (IBHFL) share price continued its climb today, 29th November 2019, as the government submitted an affidavit in the Delhi High Court. According to the affidavit, the government could not find any irregularities in the loans that were extended by IBHFL to companies as alleged in a PIL (Public Interest Litigation).
Indiabulls Housing Finance Limited’s share price swelled by over 12% as it hit today’s high at Rs. 376.80. In three days (including today), company’s share price has risen by 40%. In past one month the company’s share price has climbed by over 65%. However, this day last year (29th November 2018), company’s share price was 54% higher at the closing bell, at Rs. 700.95.
The Ministry of Corporate Affairs, in the affidavit presented that the loans provided to DLF, Amricorp, and ADRG had already been repaid, and loans offered to Chordia and Vatika were ‘standard accounts’ and here too no irregularities were found.
However, the affidavit did mention that the assessment report for Indiabulls Real Estate Limited is still being expected and the violations found during the inspection of Indiabulls Ventures Limited were still under process.
According to the statement in the affidavit submitted by the Ministry of Corporate Affairs ‘As far as the loans given by IBHF to five companies — DLF, Amricorp, Vatika, ADRG and Chordia reported to be Standard Accounts’. The affidavit also said ‘remaining issues/violations reported in the inspection report are under examination and same will be dealt as per law’.
The PIL which alleged that the company is taking part in round trip transactions was filed on the 27th of September. Following the PIL, the Delhi High Court issued notice to the company along with RBI (Reserve Bank of India), Ministry of Corporate Affairs (MCA), and Securities and Exchange Board of India (SEBI). The next date of hearing is reserved on 15th December 2019.
CLSA (formerly known as Credit Lyonnais Securities Asia) is a foreign brokerage firm based out of Hong Kong, the firm has retained the ‘buy’ rating on the stock of IBHFL and increased the target price from Rs. 350 to Rs. 450, saying that ‘clarity’ from the court case will offer relief to the firm.
CLSA had said ‘Clarity can improve the company’s access to the debt market, aiding liquidity and growth base case continues to assume marginal growth till FY21’. CLSA added ‘A 200 bps higher loan growth can lend a 3% earnings upside for the company in FY21’.