DHFL NCD Oversubscribed, Share Price Dips

Mortgage lender Dewan Housing Finance Corporation’s issue of non-convertible debentures worth up to Rs 10,000 crore was entirely subscribed today on the first day of the issue itself. According to the latest updates available with the National Stock Exchange (NSE), the issue was oversubscribed by 3.32 times till 1 pm.

Although the NCDs did well in the market, still DHFL share price closed with a drop of 0.88% in today’s trade.

DHFL’s issue encompasses Rs 2,000 crore, with an option to hold oversubscription up to Rs 8,000 crore aggregating up to a shelf limit of up to Rs 10,000 crore. Bidding for the issue opened today and will close on September 12. Net proceeds of the issue will be utilized for funding loan growth.

This was the second NCD issue by the company. The mortgage lender’s first issue was opened earlier this month. That issue was subscribed nearly 19 times on its first day with an overall subscription of about Rs 19,000 crore. DHFL’s first NCD issue comprised Rs 1,000 crore with a choice to hold oversubscription of up to Rs 3,000 crore, aggregating a shelf limit of Rs 4,000 crore. Meanwhile, DHFL share price closed at Rs. 280.40.

The follow-on secured NCD issue has 7-year tenure with the yearly frequency of interest payment. The interest rate on proposed NCDs varies between 9.05 per cent and 9.25 per cent. Retail individual investors and High Net Worth Individuals (HNIs) have a combined allotment ratio of 60 per cent. Edelweiss Financial Services, A K Capital Services, ICICI Bank, SBI Capital Markets, Trust Investment Advisors, Yes Securities, Axis Bank, IndusInd Bank and IIFL Holdings are the lead managers to the issue.

DHFL is in the top 500 performing shares list of Dynamic Levels. The closest support level for the stock is Rs. 277.85. For more details on the support and resistance levels, visit DHFL share price forecast page of Dynamic Levels website.

Oversubscribed NCD Issue of DHFL Makes Share Price Rise

DHFL drew a massive Rs.19,000 crore worth of subscriptions for its public issue of bonds. This reflects easy liquidity conditions and a yearning among investors to lock in high returns in a falling interest rate environment. The issue, which opened on Wednesday, anticipated to raise up to Rs.4,000 crore and was oversubscribed over 18 times. This is the highest ever subscription drawn by a non-convertible debentures issue.

This positive movement has led DHFL share price rise over 3%.

DHFL had provided ten diverse interest payment options to investors, including one linked to the Consumer Price Index. It had provided bonds in three, five, and ten-year tenures. Within these tenures, investors could opt for a monthly or annual payment of interest. These bonds are rated AAA by CARE and Brickwork Ratings.

Meanwhile, DHFL share price was trading at Rs. 232.30 with a rise of around 4%. The largest volume of subscription came from high net-worth individuals who put in more than Rs.9,000 crore, followed by a cumulative subscription of around Rs.5,000 crore from institutional investors.

The yield proposed by the company on the bonds for institutional investors ranged from 8.74% to 9.1%, while the yield for retail investors was between 8.33% and 9.3%. This is higher than most other AAA bonds traded in the market currently.

Mahindra and Mahindra Finance had issued the last major public issue of AAA bonds in June wherein it raised Rs.1,000 crore and had given a yield of 9% on 10-year bonds.

As an element of the issue, the company also offered CPI-linked bonds with the tenure of three years. The yield payable to institutional investors would be 4.08% above the CPI inflation rate. For retail investors, the yield would be a real rate of 4.18% above the prevailing inflation rate.

DHFL is identified among top 500 performing stock by Dynamic Levels. DHFL share price was trading in the middle of its closest support and resistance level of Rs. 220.20 and Rs. 228.40 respectively. The scrip opened at Rs. 226.20 and went as high as Rs. 233.50 intraday. DHFL share price touched the intraday low of Rs. 223.65. For more details on the stock, visit DHFL share price history page of Dynamic Levels website.