Reliance Home Finance tanks after credit rating downgrade

Reliance Home Finance fell 4.49% to Rs 5.11 after Brickwork Ratings downgraded the rating to D for the company's long-term debt programme.

Brickwork Ratings (Brickwork) has downgraded the rating to D for the company's long-term debt programme, market linked debentures (MLDs), subordinated debt, non-convertible debentures (NCDs) public issue, upper Tier-II NCDs and short-term debt programme. Brickwork has stated this action is primarily due to non payment of commercial paper.

As informed on 27 August 2019 and 10 September 2019, the lenders of the company (banks) have entered into an inter-creditor agreement for arriving at the debt resolution plan in accordance with the circular dated 7 June 2019 issued by the Reserve Bank of India on prudential framework for resolution of stressed assets.

 

The company has been directed by the lenders led by the lead bank to keep servicing only the interest obligation across all lenders. Debt servicing towards principal repayment irrespective of type of facility is to be made on parity.

The company considers the above rating action uncalled for, specifically since the company is working on the resolution plan.

Shares of Reliance Home Finance lost 9.87% in three trading sessions to its current market price of Rs 5.11, from a recent closing high of Rs 5.67 on 17 September 2019.

On the BSE, 21,967 shares were traded in the counter so far compared with average daily volumes of 10 lakh shares in the past one quarter. The stock hit a high of Rs 5.61 and a low of Rs 5.09 so far during the day.

The stock hit a 52-week high of Rs 64.7 on 19 September 2018. The stock hit a 52-week low of Rs 5.61 on 20 September 2019.

The stock had underperformed the market over the past one month, down 25.80% compared with 3.50% fall in the Sensex. The scrip underperformed the market in past one quarter, down 50.46% as against Sensex's 7.72% fall. The scrip had also underperformed the market in past one year, down 91.26% as against Sensex's 2.77% fall.

The small cap company has equity capital of Rs 485.06 crore. Face value per share is Rs 10.

Reliance Home Finance's net profit rose 0.4% to Rs 48.63 crore on a 30.7% surge in total income to Rs 536.98 crore in Q1 June 2019 compared with Q1 June 2018.

Reliance Home Finance is engaged in the house finance business.

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