ADAG stocks tumble; RInfra, RCap fall over 10%; Reliance Power tanks 20%

Reliance Power, Reliance Home Finance, Reliance Naval and Engineering and Reliance Nippon Life Asset Management were down between 7 to 20% on the BSE.

Shares of Anil Dhirubhai Ambani Group (ADAG) companies tumbled up to 20 per cent on the BSE on Tuesday after rating agencies downgraded ratings for Reliance Capital (RCap) and its subsidiaries with negative implications.

Among individual stocks, Reliance Power has slipped 20 per cent to Rs 5.93, also its new low on the BSE. Reliance Home Finance (down 18 per cent at Rs 23.10), RCap (12 per cent at Rs 128), Reliance Infrastructure (10 per cent at Rs 108), Reliance Naval and Engineering (6 per cent at Rs 8.22) and Reliance Nippon Life Asset Management (7 per cent at Rs 188) were down over 5 per cent each in intra-day trade. In comparison, the S&P BSE Sensex was down 0.68 per cent at 38,802 levels.

“The rating revision takes into account the delays in servicing of bank facilities by the company. The liquidity profile of the group continues to be under stress on account of delay in raising funds from the asset monetization plan and impending debt payments,” CARE Ratings said in press release dated April 26, 2019. CLICK HERE TO READ FULL REPORT

"The ratings continue to be on watch with negative implications," said ICRA. Adding: "This reflects slow pace of monetisation of Reliance Capital's non-core investments (non-financial services businesses) and consequently no improvement in liquidity. 

In addition, the liquidity of key operating subsidiaries Reliance Commercial Finance (RCFL) and Reliance Home Finance (RHFL) also remains stretched as was earlier highlighted in rating rationale whereby the debt repayments in the next six months are higher than scheduled inflows."

"The ratings are on rating watch with negative implications due to the longer time frame taken to monetise non-core investments at RCL and reduction in financial flexibility at RCL and its lending subsidiaries," it added. CLICK HERE TO READ FULL REPORT

"The rating revision factors the deterioration in liquidity profile of the group due to challenges faced by RCap and its key lending subsidiaries, RCFL and RHFL to raise funds through traditional bank lines and debt market instruments. The financial flexibility of RCFL and RHFL has moderated and it has curtailed disbursements to conserve liquidity which has impacted the growth in business. Further the increase in cost of funds would impact the profitability going forward," Brickwork Ratings said.

On rating downgrades, Reliance Capital said that ICRA’s rating action is ‘unjustified and unwarranted and with an illusory review process.