Shares of Indiabulls Housing Finance surged nearly 17 percent after the company disclosed its financial results for the quarter ended September 30. The housing finance company's gross non-performing assets declined by 3.1 percent to Rs 1,611 crore. Indiabulls Housing Finance's consolidated Q2 net profit fell 32 percent to Rs 702.18 crore year on year, while total income fell 24 percent to Rs 3,420.45 crore.
The stock price jumped as much as 16.71 percent to a high of Rs 255 intraday on the BSE. At 11.30 AM, Indiabulls Housing Finance shares traded 10.40 percent higher at Rs 242.05 per share. The Sensex was up 0.18 percent at 40,552.77.
The government's proposal to create a Rs 25,000 crore alternative investment fund for middle-income and affordable housing project has also boosted sentiment for the shares of housing finance companies. The fund is expected to support around 1,600 projects across major cities in India.
The company said its board approved the issuance of non-convertible debentures of up to Rs 10,000 crore. Its board of directors also declared an interim dividend of Rs 7 per equity share.
Edelweiss Securities said Indiabulls Housing Finance's valuations would remain under pressure owing to weak real estate sentiment in the country and with the merger with Lakshmi Vilas Bank rejected.
"However, management is trying hard to reignite investor confidence by evaluating a potential buyback (subject to regulatory clarity) and a higher dividend (rate maintained at 50% levels)," said the brokerage.
Gagan Banga, VC and MD of Indiabulls Housing Finance, said in an interview to CNBCTV18, "our pre-provisioning operating profits, along with the other buffers that we carry, have put us in a position that whatever be the situation we should be able to handle it as we have handled the last 13 months.”
Indiabulls Housing Finance shares fell over 71 percent in the last one year due to several regulatory and legal issues. Allegations of financial fraud were filed against the promoters of the housing finance firm and its parent.
The Citizens Whistle Blower Forum has filed a public interest litigation before the Delhi High Court wherein certain allegations have been made against the Indiabulls group. The company has vehemently denied the frivolous allegations that have been made without basic research or inquiry. The company has also filed a perjury application wherein notice has been issued," the company said.
It said the management has concluded that the allegations made in the writ petition has no merit and no impact on the financial statements. The matter is sub-judice and pending with the Delhi High Court, it added.