DLF Ltd shares fell to a record low on Tuesday, wiping out $1.2 billion in market value, after the Securities and Exchange Board of India banned the property giant from capital markets and raised investor concerns about how it will service its debt.

DLF shares ended down 28.46 per cent at Rs 104.95 on the BSE and were down 27.98 per cent at Rs 105.80 on the NSE.

DLF, whose shares slumped as much as 28 per cent in Mumbai, may be forced to sell assets to pay down its debt that reached Rs 19,100 crore ($3.13 billion) at end-June, analysts say.

DLF's debt has been a longstanding investor concern, and it will not be the first time the company is offloading non-core assets.

SEBI ruling on Monday marks the latest regulatory threat to the property developer, which is facing a probe from the antitrust watchdog and is also at the centre of a political controversy over sweetheart land deals in the northern state of Haryana.

Banned from securities market

In a major blow to DLF, SEBI has barred the realty major as well as its six top executives, including Chairman and main promoter K P Singh, from the securities market for three years for“active and deliberate suppression” of material information at the time of its IPO.

Besides K P Singh, those barred from the securities market include his son Rajiv Singh (Vice-Chairman), daughter Pia Singh (Whole Time Director), Managing Director T C Goyal, former CFO Ramesh Sanka and Kameshwar Swarup, who was ED-Legal at the time of the company’s public offer in 2007.

On its part, DLF had said late last night that it has not violated any laws and it would defend its position against any adverse findings in the SEBI order.

“DLF has full faith in the judicial process and is confident of vindication of its stand in the near future,” the company said in a statement.

The stock had fallen by nearly 4 per cent yesterday too.

The company said that the order, dated October 10, came to its notice only yesterday and the same was being reviewed by DLF and its legal advisors.

After its over four-year-long probe, SEBI found that a “case of active and deliberate suppression of any material information so as to mislead and defraud the investors in the securities market in connection with the issue of shares of DLF in its IPO is clearly made out in this case.”

In his 43-page order, SEBI’s Whole-Time Member Rajeev Agarwal also said that violations are grave and have larger implications on safety and integrity of the securities market.

While the regulator has not imposed any monetary penalty, the prohibition order would bar DLF and the six persons, from any sale, purchase or any other dealings in the securities market for a period of three years, including for raising funds.

"DLF's inability to access capital markets could impact its fund-raising program, both at the listed company level and potential listing of its commercial assets such as Real Estate Investment Trusts (REITs)," Macquarie research said.

"DLF, in this case, would have to resort to large asset sales to reduce debt in the future."

Macquarie rating

Macquarie has put its "outperform" rating on the company's stock on review, it wrote in a note on Tuesday.

The ban follows what SEBI said was DLF's failure to provide key information on subsidiaries and pending legal cases at the time of its record-breaking 2007 initial public offering.

Barclays cut its price target on DLF shares to Rs 159 from Rs 222, citing the latest regulatory headwind for the company.

DLF had debt of more than Rs 19,000 crore as on June 30, 2014, while its already-proposed fund-raising plans include nearly Rs 3,500 crore through issue of certain bonds to lower its debt burden.

This is one of the rare orders by SEBI where it has barred a blue-chip firm and its top promoter/executives.

SEBI’s order can be challenged at the Securities Appellate Tribunal.

DLF is the largest real estate group in the country with nearly Rs 10,000-crore annual turnover and a market value of over Rs 26,000 crore. Its market cap had crossed Rs one lakh crore mark soon after its listing in 2007, but fell later.

DLF’s IPO in 2007 had fetched Rs 9,187 crore — the biggest IPO in the country at that time.