Shares of Reliance Communications tanked over 4% on Wednesday after the rating agencies Fitch and Moody’s on Tuesday downgraded credit rating of the company on account of its fragile liquidity position and limited ability to pay back debt.
The stock hit an intraday low of Rs 19, down 4.2% on the BSE.
RCom has fallen over 24% since the company reported loss of Rs 948 crore for the fourth quarter, hurt by intense price war unleashed by newcomer Reliance Jio. It had registered net profit of Rs 79 crore in the corresponding quarter of the previous fiscal year.
RCom shares rose as much as 4.6 per cent on Monday after the debt-laden mobile carrier said it has won a seven-month reprieve on its loans from lenders, but pared gains in Tuesday’s session on concerns over growing debt.
On Tuesday, Fitch downgraded RCom to the lowest category with some hope for recovery of principal or interest amount while Moody’s Investors Service downgraded the firm to the second lowest category.
“The outlook is negative,” Moody’s said in a statement, adding the ratings are under review for further downgrade.
Fitch in a statement said, “Fitch Ratings has downgraded India-based Reliance Communications Limited’s (RCom) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) to ‘RD’ from ‘CCC’.
“Fitch has also downgraded the rating on RCom’s $300 million 6.5 per cent senior secured notes due 2020 to ‘C/RR4’ from ‘CCC/RR4’.”
About a week back, Moody’s had downgraded RCom rating to Caa1 from B2. Apart from Fitch and Moody’s, two other agencies ICRA and CARE have also revised their ratings on the company’s loan facilities recently.
RCom’s net debt stood around Rs 45,000 crore as on March 31 this year. The lenders of the company have given it seven months time to repay debt.