InvestorQ : is it best time to buy dhfl shares?
Rushikesh Pelnekar made post

is it best time to buy dhfl shares?

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Purvesh answered.
1 year ago

It is a stock best avoided for now. Dewan Housing has been in the news for all the wrong reasons. Last week, the company defaulted on Rs.942 crore worth of interest on NCDs due to a liquidity crunch. Although the company did pay the interest, it was only done after the company managed to sell off its Aadhar Housing subsidiary and its Avanse Education Funding Company. Here are 4 reasons why you should stay away from DHFL for now.

The company is expecting a huge shortfall in the month of July. It has expected outflows of Rs.6400 crore and expected inflows of just Rs.2200 crore, leaving a liquidity shortfall of Rs.4,200 crore. It is not clear, how the company will manage this liquidity shortfall.

The company has a massive debt burden of Rs.98,000 crore. That means, the interest payment burden will persist month after month. DHFL just does not have cash flows to manage such a huge payout.

DHFL has a maturity mismatch problem in its balance sheet. In other words, it has been using short term borrowing to fund long term assets. That is getting tougher as DHFL bonds have been downgraded to “Default Status” and with that rating getting any kind of fund is going to be hard.

Finally, there are also some investigations into the company’s usage of funds and the investigations are being done by the ED and the SFIO. These could be an overhang on the stock. While the stock has surely corrected very sharply, DHFL still has too many problems. You should not look to buy the stock unless there is clarity on all these issues.

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1 year ago

DHFL is highly dicey prospect with lots of negative news about mishandling getting reported.

It is best to avoid the same for now.

Also,not much growth is expected in the near future.