Investor sentiment has turned sour towards Anil Dhirubhai Ambani company stocks (ADAG) after telecom company Reliance Communications (RCom) defaulted on interest payment.
The seven listed companies belonging to the group fell as much as 12 per cent on Wednesday as investors feared spillover of the RCom
crisis to others. RCom, which has failed to pay a coupon on its 2020 dollar notes, has seen its share price erode by 41 per cent this month and 70 per cent in 2017.
Once the second-largest telecom company, it struggles with debt of Rs 49,000 crore, amid depleting revenue. “A solution doesn't seem in sight. Assets are depleting, while debt is mounting,” said S P Tulsian, an independent research analyst. “Investor sentiment has turned negative towards all group companies after RCom’s default. And, debt of other group companies is also mounting.”
Shares of Reliance Infrastructure
fell 9.2 per cent, extending its monthly loss to 17 per cent. The company, which operates a power utility in Mumbai, has debt of Rs 26,500 crore and market capitalisation below Rs 11,000 crore. Reliance Capital’s share price declined 10.2 per cent, stretching its loss this month to 27 per cent.
Newly-listed Reliance Nippon Asset Management, the group’s most valued company, fell seven per cent and briefly even slipped below its initial public offering price.
Following Wednesday’s carnage, the combined market capitalisation of all Anil Ambani
group companies stood at Rs 55,790 crore, less than half the debt of Rs 1.18 lakh crore at the end of March. Ambani is banking on asset sales across verticals to ease the loan payment burden. In recent months, the group has sold its multiplex and radio businesses. It has also monetised stake in e-wallet
has assets such as an undersea cable, a data solution centre, mobile towers and spectrum. Tulsian said asset sale by RCom
was not gathering pace, while “interest costs and operational losses” were mounting.