Anil Ambani-led ADAG companies' shares extended Wednesday's fall, with Reliance Communications share price falling further to near the record lows before recovering a little today. Several bankers who have exposure to RCom, which fell on Wednesday, were trading mixed today with no major gains or losses across the board.
Anil Ambani group companies’ shares extended Wednesday’s plunge, and fell further today as investor fears over the group debt persisted, with Reliance Communications share price nearing the record low in single digits. Today, the stock of Reliance Naval and Engineering fell as much as 15% followed by Reliance Capital and the debt-laden Reliance Communications. Yesterday, Most shares of the Reliance ADAG tumbled sharply amid heavy trading volumes on in the late afternoon trade, with the Anil Ambani group’s Reliance Communications shares falling to single digits for the first time ever.
Shares of Reliance Naval and Engineering shed 14.97% 14.97% to hit a 52-week low of Rs 37.2; Reliance Capital lost 4.84% to Rs 402.25 while Reliance Communications, which was the worst loser among the ADAG stocks yesterday, plunged 4.92% to the day’s low of Rs 9.65. It later recovered but was still trading 1% down at Rs 10.05. RCom made a lifetime low of Rs 9.6 on Wednesday. Other stocks of Anil Ambani Reliance group were trading little higher, Reliance Infrastructure gained 2.73% to the day’s high of Rs 428.8; Reliance Nippon Life Asset Management rose 2.39% to the day’s high of Rs 260.3 and Reliance Power added 1.69% to Rs 35.9.
The telecom arm of ADAG, Reliance Communications is reeling under the immense burden of debt. Shares of Reliance Communications fell about 17.24% to hit an all-new record low of Rs 9.6. Following the slump in ADAG stocks, the banks who have exposure to RCom also dived on Wednesday with Corporation Bank falling as much as 7.5% while State Bank of India slipped 2.1% and Punjab National Bank by 2.7%. All those lenders are trading mixed today with no major gains or losses across the board.
Reportedly RCom had also failed on US dollar bonds which is the first default by an Indian company in 15 months. “Reliance Communications Ltd., the Indian mobile phone operator controlled by billionaire Anil Ambani, failed to pay a coupon on its 2020 dollar notes before the expiry of a grace period on Monday,” Bloomberg reported citing an unidentified person familiar with the matter.
Reliance Communications shares are on a continuous downside from this week. The Anil Ambani led telecom company Reliance Communications posted a net loss for the fourth straight quarter. Reliance Communications is struggling with a heavy debt burden amid the ongoing tariff wars in the telecom sector which has eaten into margins. Recently on Saturday, RCom reported a consolidated net loss of Rs 2,709 crore for the July-September period versus a profit of Rs 62 crore in the same quarter a year ago.
RCom is reeling under a total debt of about Rs 45,000 crore. Of this, Rs 25,000 crore is domestic debt and remaining Rs 20,000 crore is in the form of foreign loans and bonds. RCom has classified Rs 22,550 crore of borrowings as non-current liabilities. With a net of debt of Rs 44,300 crore as of end-March 2017, RCom is the most leveraged among listed Indian telecom companies. The telecom company has missed interest payments on two outstanding domestic non-convertible debentures.