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The board of directors of Indiabulls Housing Finance will take a final decision on buyback proposal upon receipt of confirmation from SEBI. The board, which met on Monday, said it has inclined for a buyback of shares.
Based on legal advice received on the subject of a buyback, the board thought it is prudent to first confirm with SEBI on the applicability of the debt-equity ratio norm of 6:1, it said in a notice to the stock exchanges. The company seeks to know from SEBI whether the currently prescribed debt-equity ratio for subsidiary NBFC/ HFC is also applicable to it (which is a parent listed company).
The present market value of the company is at a steep discount to its historical valuation multiples, and the buyback represents excellent use of the company’s capital, given its high capital adequacy ratios and the liquidity available, Indiabulls Housing Finance said in the notice.
The promoter had informed the board that neither he nor any of his promoter companies intend to participate in the buyback, it further added.
The board noted the adverse impact on the share price following the circulation of rumours, fake news and unfounded allegations in social media, and the reproduction of these allegations in a PIL filed against the company concerning loans to leading developers extended in the normal course of the company’s business as a housing finance company. The board directed the company to double-down on legal efforts to effectively counter these malicious attacks and also to explore complaining to regulatory authorities to investigate build-up of short positions coinciding with the circulation of rumours and false news, the statement said.
Meanwhile, shares of Indiabulls Housing Finance slumped 3.6 per cent at Rs 199.60 on the BSE following Moody's downgrade.
It may be recalled the boards of Indiabulls Ventures and Indiabulls Real Estate last week had approved buyback of shares worth ₹1,000 crore and ₹500 crore respectively.
Indiabulls Ventures plans buyback of up to 6.66 crore equity shares, representing 12.61 per cent of its total existing fully paid-up equity capital at ₹150 a share.
Indiabulls Real Estate would buyback five crore shares, representing approximately 11 per cent of its total existing paid-up equity capital, at ₹100 a share.
Both the buybacks would be through the 'tender offer' route on a proportionate basis and would be subject to shareholder approval, they said.
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