Anil Ambani Group stocks under pressure on debt concerns; RCom falls 24%

Reliance Infra, Reliance Capital, Reliance Power and Reliance Defence too down over 4%

Shares of Reliance Anil Dhirubhai Ambani Group (ADAG) companies were under severe pressure, falling by up to 24% on BSE in intra-day deals on concerns of whether the group would be able to repay the high debt to banks amid poor March-quarter results. 

RCom tanked nearly 24% in intra-day trade to Rs 19.70, also its record low on the BSE. Reliance Infrastructure, Reliance Capital, Reliance Power and Reliance Defence, the other ADAG group stocks, too, slipped in the range of 4% to 8% on the BSE, as against 0.24% rise in the S&P BSE Sensex at 12:20 pm.

RCom on Saturday had reported it biggest quarter consolidated net loss of Rs 948 crore in March 2017 (Q4FY17) quarter. The company had posted a consolidated net profit of Rs 79 crore in the year ago period.

“The telecom sector in India has been very adversely impacted on account of “free offers, disruptive pricing and hypercompetition during 2016-17 by competitive intensity on a scale never witnessed before in the country,” Reliance Communications said in a statement.

The five ADAG companies had reported a combined net loss of Rs 414 crore in Q4FY17, as against a profit of Rs 331 crore y-o-y.

"The fall in ADAG stocks today was mainly due to the debt issue. No recovery will be seen in the stocks in the near future as investors will keep selling them to recuperate the losses, especially in Reliace Communications. The stock will soon fall enough to trade in single digit. Any stock with a debt issue will recieive the same treatment from the markets. A number of better opportunitues are available for the investors than to stay with a company under so much debt." said CMD, CNI Research.

Adding: "Even with its partnership with Aircel, the company doesn't have enough muscle to give competition to RelianceJio."

According to a report in Economic Times, the Anil Ambani-owned mobile phone operator has defaulted on its loan servicing obligations with more than 10 local banks, some of whom have categorised the exposure as "special mention account" in their asset books. Read the report here

Last week RCom’s overseas bond also plunged 30% after a cut in credit rating and reports of delay in interest payment. 
 

In past two weeks, the stock of RCom has slipped 38% after CARE Ratings had cut its rating on the company’s long-term bank facilities and non-convertible debentures, citing increased competition, high debt levels and lower cash accruals. ICRA, too, cut its rating earlier this month, with a negative outlook, citing weakening prospects for revenue generation and profitability. READ MORE ON ICRA DOWNGRADE

A combined market capitalization (m-cap) of ADAG companies declined Rs 12,505 crore to Rs 46,459 crore, after a sharp decline in market value of these five companies during the period.

COMPANY	LATEST	PREV CLOSE	LOSS(%)
REL. COMM.	20.85	25.80	-19.2
RELIANCE INFRA.	469.00	507.15	-7.5
RELIANCE CAPITAL	552.05	592.85	-6.9
RELIANCE POWER	40.90	43.55	-6.1
RELIANCE DEFENCE	55.80	58.20	-4.1