Is It a Good Time to Invest in Indiabulls Housing Finance Ltd. Shares in 2022?
Indiabulls Housing Finance Ltd. (IBHFL) has been undergoing a significant downturn in its share price. However, as we explore whether now is the right time to invest in this company's stock, multiple factors come into play, including recent regulatory developments, financial health, and the macroeconomic environment.
Current Situation and Historical Performance
The current price of IBHFL shares stands at around Rs. 220 in January 2022. This is a stark contrast to its 52-week high of Rs. 313.70 reached in June 2021. Multiple external factors, such as the crisis in the NBFC (Non-Banking Financial Companies) sector in September 2018, have contributed to this decline. Companies like Dewan Housing Finance Limited (DHFL) were severely affected, with Indiabulls Housing Finance slightly affected but still not recovering fully since then.
Regulatory and Financial Insights
Recently, the Securities and Exchange Board of India (SEBI) concluded that there were no wrongdoings in the company as mentioned in PILs (Public Interest Litigations) in 2019. This is a positive signal for investors, suggesting that the company is operating within the regulatory bounds. Moreover, Indiabulls Housing Finance has a strong financial track record and a good dividend yield history, which could be attractive to long-term investors.
Expert Opinions and Analysis
From a long-term perspective, the stock may be worth considering. It has fallen in sympathy with other NBFC and HFC (Housing Finance Companies) stocks, and its distinct business model offers advantages. Additionally, the merger with Lakshmi Vilas Bank (LVB), which has been approved by the Competition Commission of India (CCI), could further enhance its position.
However, opinions are varied. Some argue that the share price has been continuously falling since the crisis in 2018 when ILFS defaulted on loans to NBFCs. Shares like Indiabulls were severely hit, and the company has not seen a recovery since. For such cases, a cautionary approach is recommended. The falling knife theory suggests that attempting to catch a falling stock is risky and could result in financial losses.
Conclusion and Recommendation
Based on the past and recent performance of the stock price, it is not advisable to consider this an investment grade stock at the current price. The market has seen robust growth, whereas IBHFL shares have not moved proportionately, signaling potential underlying issues.
Investors should exercise caution and consider seeking reliable expert advice before making any investment decisions. If you are looking for a long-term stable investment, exploring companies with strong fundamentals like Indiabulls Housing Finance might offer potential, but at the current valuation, risks outweigh the rewards.
Key Takeaway: At the current price in 2022, it is not a good time to buy or speculate on Indiabulls Housing Finance shares. Consider consulting with financial experts for reliable decision-making.