InvestorQ : I recently bought Indiabulls Housing Finance at around the current market price. Now that it has been downgraded by ICRA, should I hold or exit the stock?
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I recently bought Indiabulls Housing Finance at around the current market price. Now that it has been downgraded by ICRA, should I hold or exit the stock?

Answer
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12 months ago


ICRA has downgraded the long term ratings of Indiabulls Housing Finance from AAA to AA+. This is more due to the current challenges facing the NBFC sector in general and the housing finance sector in particular. With regard to their merger with Laxmi Vilas Bank, ICRA has pointed out that regulatory approvals are still pending and that posed a risk to the company. While ICRA has downgraded its long term debt of Rs.65,000 crore to AA+, the rating of its short term CP program of Rs.25,000 crore is still held at AAA. The challenges that ICRA sees are more with respect to the liquidity situation and that is true for all companies. Since the stock has already corrected sharply, you can hold on to the stock. Ideally, keep a stop loss if the stock sees more negative news flows.