The downgrade is driven by more-than-expected reduction in the company's liquidity because of further delays in fundraising from sell down of project finance loans and lower inflows from securitisation of non-housing loans, CRISIL said in rating rational.
Additionally, CRISIL notes that DHFL, as a strategic decision, did not resort to securitisation of readily available housing loans to prop up the liquidity levels. CRISIL also notes higher-than-scheduled liability repayments.
CRISIL believes there is heightened additional risk of unscheduled early redemption of NCDs. On the other hand, there is low visibility regarding timely fund raising. Consequently, DHFL's liquidity levels are expected to remain low with reduced cushion or buffer for upcoming cash outflow. With liquidity weaker than previously envisaged, sensitivity of timely receipt of funds from various initiatives has increased significantly.
The rating agency said it will continue to monitor DHFL's ability to quickly raise sufficient and diversified resources and prop up its balance sheet liquidity. The progress of various initiatives and their impact on fund raising, build-up of liquidity and business growth will be key rating sensitivity factors, it added.
In the past one month, the stock has underperformed the market by falling 33 per cent, as compared to a 4 per cent decline in the S&P BSE Sensex till Monday. Thus far in the calendar year 2019, it has tanked 55 per cent against 3 per cent rise in the benchmark index.