Dewan Housing Sells Rs 7,400-Crore Loans, Repays Rs 14,000-Crore Debt Amid Liquidity Crunch In Market

Dewan Housing Finance Corporation Ltd. sold loans worth Rs 7,400 crore and repaid Rs 14,000 crore of debt in the past two months even as non-bank lenders faced a liquidity crisis.

The mortgage lender sold down the retail pool of loans in 50 days to eight banks and financial institutions, according to its statement. Non-bank financial companies often sell a part of their loan portfolios after holding them for a stipulated period. Banks, in turn, buy these to show growth or to meet priority sector lending requirements.

Of the total liabilities repaid since Sept. 24, more than Rs 9,000 crore is commercial paper repayment, Chairman and Managing Director Kapil Wadhawan said in the press statement announcing its earnings for the quarter ended September. “This target was met by the company through internal liquidity generation and minimal external borrowings.”

Dewan Housing repaid debt amid concerns that non-bank lenders will find it difficult to refinance market borrowings after a tight liquidity condition stemming from payment defaults by IL&FS Group companies. Shares of Dewan Housing tumbled nearly 70 percent from their September peak.

The mortgage lender, however, clarified that it didn’t default on any bonds or delayed repayment of any liability. Also, the promoters haven’t pledged any shares or availed any loan against share, it said.

The company’s loan book outstanding grew 35 percent year-on-year to Rs 1.1 lakh crore in the September quarter. Total loan disbursements, according to the release, rose 39 percent over the last year to Rs 13,870 crore.

Earnings Highlights

• Profit of the non-bank lender rose 52 percent on a yearly basis to Rs 439 crore in the quarter ended September, according to its statement.
• Assets under management grew 38 percent year-on-year to Rs 1.3 lakh crore.
• Gross non-performing asset stood at 0.96 percent as of Sept. 30.
• The company said it will maintain margin at 300-305 basis points as two-thirds of its home loan portfolio is below the Rs 11-lakh ticket size.

Edelweiss, in its preview note, said liquidity sentiments hit the company only towards the end of the quarter and wouldn’t impact its business significantly in the three months ended September.