Indiabulls Housing Finance: One of my favourite players of the recent past has been Manish Pandey. He was hitting centuries when he was just 19 and this even got him into the Indian national team. But since 2019 things started to turn around and his unfortunate poor form continues. In the stock market, we have many such that have been multibaggers in the past.
But today they are one of the riskiest investments and possibly even the fast track to losing your money in the stock market. Indiabulls Housing Finance is one such stock which today trades at Rs. 99.
But in its glory days, the stock was a multibagger trading at Rs. 1400. A better understanding of what exactly happened gives us an edge when it comes to exiting such investments. So keep reading to find out exactly what went wrong with India bulls.
The rise and fall of Indiabulls Housing Finance
The group started its operations in 1999 as a financial services company. The company enjoyed immense success with several of its subsidiaries also getting listed on the stock exchange.
The company’s first major signs of trouble came in 2019. This was when the company was accused of siphoning off funds. This set off a domino effect which made investors look more closely at its prospects.
This however was investigated by by the Ministry of corporate affairs. Several raids were conducted by the Enforcement Directorate however none of the allegations were proved to be true. But the investigation continued to affect their company’s image further hurting their investors.
Poor Financials
But before we jump to a conclusion that the stock price is falling because of a unproved allegation lets have a look at the financials of Indiabulls Housing Finance we find out that ever since 2019, the company’s revenues have continuously fallen from Rs. 17,019 cr. to Rs. 8983 cr. in 2022.
Their net profit also shows a similar sign falling from Rs. 4057 cr. to Rs. 1177 cr. Their debt situation doesn’t look to good too as the company’s debt equity ratio currently stands at 3.68. The one silver lining here is that the company’s debt-equity has reduced from 6.99 over the years to 3.68.
Unclear Future of Indiabulls Housing Finance
But this is not too bad if the company has future prospects. But even when we look at some indicators which provide insights into Indiabulls future, they do not look to bright. Firstly if we take a look at Indiabulls promoter holdings we can see huge sell-offs recently. Its promoter Sameer Gehlaut sold off 11.9% in late 2021.
The promoter still holds 9.8% but Indiabulls is now a fully professionally owned business. The company also has engaged in the sale of its mutual funds business to Groww. To add to this Indiabulls had earlier made headlines for firing up to 2000 employees.
In Closing
Making notes of several red flags in the company gives us an idea as to why Indiabulls is looked at as trouble by several. Another important aspect we must notice here is also broker recommendations.
When Indiabulls Housing Finance reached Rs. 200 levels late in 2021 and 2022 we can see several brokers recommending the stock. But the results otherwise highlight the dangers of catching a falling knife in the market. Let us know what you think about the stock in the comments below. Happy Reading!
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Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
