The company says if undrawn bank lines are included in their liquidity assessment the company will have a liquidity surplus of over Rs 120 billion at all times, after meeting all its financial obligations. All non-banking financial companies (NBFCs) have undrawn bank lines to help manage their liquidity pressures.
At present, liquidity surplus stands at Rs 61.6 billion, which will reduce to Rs 22 billion by November 2018 and subsequently rise thereafter over the coming months to Rs 81.7 billion by March 2019, as illustrated in the company’s presentation to investors.
Kapil Wadhawan, Chairman and Managing Director of DHFL said, “The reiteration by CARE and ICRA on the high degree of safety of DHFL’s bonds and the organisation’s total commitment to its financial obligations, come at a very critical time."
Last Friday, DHFL’s stock plummeted by 42 per cent to close at Rs 351.55 on the Bombay Stock Exchange (BSE) following rumours of a liquidity crisis. The panic in the market set in after DSP Mutual Fund sold around Rs 3 billion of DHFL papers at a discount (11 per cent) in the secondary market in order to raise funds to cover their defaulting investments in IL&FS.
DHFL does not have any exposure to IL&FS, the company’s management said last week.
In a statement to the stock exchange, the company said they have neither defaulted on their bonds or repayment of any of its financial liabilities. The spread of rumours about tightening liquidity caused a sell-off in NBFC stocks on Friday.
DHFL has received re-affirmation of their present credit rating from agencies like CARE (AAA) and ICRA (A1).
The company says liquidity will remain tight during the second-half of this financial year with volatility in the markets
and expectations of 2 rate hikes by the Reserve Bank of India in the near future,
DHFL at present borrows around Rs 500 billion every year through instruments like external commercial borrowing, bank lines, commercial papers and securitisation. Assets Under Management (AuM) stands at Rs 1,209.4 billion as of the quarter ended June 2018, growing at a healthy CAGR of 26.4 per cent year-on-year.
Earlier this year the company raised Rs 109.5 billion through non-convertible debentures (NCDs) and another Rs 52 billion through private placement including Masala Bonds.
DHFL's stock price closed at Rs 392.15 on the NSE, on Monday, up by nearly 12 per cent from its closing price last Friday.