ADAG firms soar on bourses post deal on pledged shares

Mumbai: Shares of Reliance Anil Dhirubhai Ambani Group surged on Monday after the group reached an understanding with at least 90 per cent of its lenders to avoid selling any stock pledged by the promoters until September 30. However, market experts still view the group stocks as a risky bet in the short term.

Reliance Communications surged 11 per cent to close at Rs 6.10 on the BSE. Reliance Home Finance surged 6.7 per cent to Rs 25.45, Reliance Infrastructure gained 7.4 per cent to Rs 123.40 and Reliance Power jumped 11.3 per cent to Rs 11.35. Reliance Capital gained 3 per cent to Rs 152.30 and Reliance Nippon Life Asset Management rose 2.6 per cent to Rs 155.25.

This agreement has come after some lenders offloaded pledged shares of the group companies following sharp decline in their stock prices.


“The group will pay principal and interest to lenders as per the schedule specified in the loan agreements. The group has also informed the lenders that it has appointed investment bankers to sell a part of its direct 30 per cent shareholding in Reliance Power Ltd to institutional investors. Road shows will commence next week,” said a Reliance Group spokesperson.

Independent investment advisor SP Tulsian said the resolution process of Reliance Communications through National Company Law Tribunal will take time.

“I don’t think the settlement of RCom through NCLT will be seen in the next seven months, which is the timeline bought by the company from lenders,” said independent investment advisor SP Tulsian.

“There will be multiple proceedings now feared getting initiated by secured creditors, operational creditors and entities such as Ericsson, which may deal resolution through NCLT,” said Tulsian.

Reliance Communications had announced on February 2 that it will file for bankruptcy. From the date of this announcement till Friday, Reliance Communications fell 27 per cent, Reliance Home Finance fell 31 per cent, Reliance Power declined 40 per cent while Reliance Infrastructure's stock value nearly halved.

During this period, Reliance Capital and Reliance Nippon fared better. Reliance Capital fell 2.1 per cent between February 4 and February 15 while Reliance Nippon gained over 15 per cent during the same period.

The pact to prevent share sales will provide tactical relief to the group stocks, said G Chokkalingam, Founder, Equinomics Research and Advisory.

“Some of them have better fundamentals but they are facing pressure because of pledging. In the short term, those who are willing to take risks, can look at buying Reliance Infra, Reliance Nippon and Reliance Capital,” said Chokkalingam.

Investment advisor Sandip Sabharwal believes that buying ADAG stocks in the short term “Buying these stocks in the short term would be like playing blind. An investor with a view of one to three years can look at buying Reliance Capital. The insolvency process of Reliance Communications should be over by then,” said Sabharwal.