October 10, 2019 / 7:25 AM / a month ago

BUZZ-Indiabulls Housing plunges after RBI rejects merger with Lakshmi Vilas Bank

(Updates shares, adds Morgan Stanley comment)

** Shares of Indiabulls Housing Finance Ltd dive as much as 19.7% to their lowest since March 10, 2014, after the central bank blocked the mortgage lender’s merger with Lakshmi Vilas Bank Ltd

** Indiabulls Housing Finance says “the uncertainty of the last five months on the business is lifted”; adds it will focus on growth of its core housing finance business

** Co will consider proposal of shares buyback, it said in a separate release on Wednesday

** “Since most market participants are reluctant giving them money, this rejection further jeopardises the funding situation for IHFL,” Macquarie Research said in a note on Wednesday

** Macquarie adds it is reviewing the investment case for co

** Around 46 mln shares change hands, as of 0702 GMT, vs 30-day avg of 25.5 mln shares

** “Our view was that approval would not be easy and even if it were to happen conversion into a bank could significantly hurt return ratios,” Morgan Stanley said in a separate note

** Two of the seven analysts covering the stock have “buy” or “strong buy” rating, four have “hold” and one “sell”; median PT 527 rupees - Refinitiv data

** Stock down 71.92% this year, up to last close

** Lakshmi Vilas shares dropped 4.8% to their lowest since Sept 22, 2006; stock set for an eighth straight session of losses (Reporting by Philip George in Bengaluru)

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