(Reuters) - India’s Dewan Housing Finance Corp lost nearly half of its market value over five sessions ending on Friday, its worst week since listing, hit by claims of financial mismanagement and broader sectoral woes.
Investigative media outlet Cobrapost on Tuesday alleged that loans from Indian state banks were diverted by Dewan to shell companies, including those linked to its controlling shareholders.
The allegations are also the latest setback for a shadow banking sector stung by a string of defaults at lender IL&FS, triggering sharp falls in stock and debt markets last autumn.
Dewan has denied lending to shell companies and said on Thursday that it had not received any communication from the government in relation to an investigation. Reuters reported on Wednesday that India had begun inquiries into the Cobrapost claims.
Shares in Dewan have lost more than 46 percent over the week, wiping 30.72 billion rupees ($431 million) off its value, and closed at 111.20 rupees on Friday, down 18 percent on the day and at their lowest level since May 2014.
Though this week marked the stock’s biggest fall in percentage terms, investors lost more than 80 billion rupees in the week ending Sept. 21, when housing finance stocks were hit by panic selling.
The Mumbai-headquartered company on Thursday appointed an “independent” auditor to investigate the allegations.
Asked on Friday about loans given to Dewan Housing, State Bank of India’s Chairman, Rajnish Kumar, said the bank was “not worried” at the moment, adding that it was keeping a close eye on developments.
Dewan Housing, one of India’s largest home loan lenders, has fallen dramatically from its record high in September, with its market value plunging by more than 170 billion rupees over the past five months.
($1 = 71.2350 Indian rupees)
Reporting by Arnab Paul and Chris Thomas in Bengaluru; Editing by Rashmi Aich and David Goodman