IL&FS group shares locked in lower circuit; ITNL, IL&FS Engg fall 10%

IL&FS Engineering and IL&FS Transportation Networks are frozen 10% lower circuits at Rs 22.70 and Rs 27.25, respectively, while IL&FS Investment Managers down 5% at Rs 9.81 on the BSE.

Shares of three listed IL&FS group companies are locked in their respective lower circuits on the BSE after the rating agency Brickwork Ratings downgraded the rating for the non-convertible debentures (NCDs).

IL&FS Engineering and Constructions (IECCL) and IL&FS Transportation Networks (ITNL) are frozen 10% lower circuits at Rs 22.70 and Rs 27.25, respectively, while IL&FS Investment Managers down 5% at Rs 9.81 on the BSE. There were only sellers seen on these counters. In comparison, the S&P BSE Sensex was trading 0.79% lower at 34,105 at 09:38 am.

In last week, all these stocks had outperformed the market by surging up to 90% after the government took control of infrastructure financier Infrastructure Leasing & Financial Services (IL&FS).

“The revision in the rating of ITNL factors the delays in servicing of debt obligations by ITNL for the structured NCD rated by BWR. The rating factors the impaired liquidity profile of ITNL and the group which continues to be under financial stress on account of delay in fund infusion by promoters and sizable debt repayment obligations in the near term. The repayment on commercial paper issued by ITNL is not yet due,” Brickwork Ratings said in a statement.

As a part of deleveraging efforts at ITNL and the group level, monetization of certain assets was to happen to reduce debt levels including the infusion of capital by the promoters. The liquidity situation has worsened post the inconclusive shareholder meeting on 15th September 2018, where the funding support was envisaged at IL&FS level resulting into the longer than expected time for deleveraging, it added.

CARE Rating downgrades the ratings of IECCL factoring the delay in debt servicing obligation on its rated facilities.

As a part of the deleveraging plan, IL&FS group (IL&FS, rated CARE D) had envisaged monetization of certain identified assets to reduce debt levels, infusion of equity capital to decrease leverage as well as have a funding line from its shareholder entities as a liquidity measure.

However, the deleveraging has taken longer time than expected, while uncertainty about the timely infusion of funds vis-à-vis impending debt payment obligations in the near term has severely impacted the liquidity profile of the promoter and the group entities, it added.