Reliance Infra falls on Crisil debt downgrade

MUMBAI: Shares of Reliance Infrastructure (RInfra) came under selling pressure after CRISIL downgraded the company’s debt programmes and long-term bank facilities to ‘CRISIL A+/Negative’ from ‘CRISIL AA-/Negative’.

CRISIL, however, withdrew its rating on RInfra’s short-term debt on company’s request as there is no CRISIL-rated short-term debt outstanding currently.

At 11:05 a.m.; the stock was at Rs 378.40, down 3.69 per cent, on the BSE. It touched a high of Rs 388.70 and a low of Rs 376.35 in trade today.

“The rating revision reflects lower revenue visibility in its engineering, procurement, and construction (EPC) business coupled with higher-than-expected exposure to RInfra’s group companies. The impact of these developments is partially offset by the incremental annual cash flow expected from the recovery of regulatory assets in its Mumbai distribution business,” the CRISIL report said.

According to the report, RInfra’s EPC business has low revenue visibility considering the EPC order book of Rs 11,000 crore (as on March 31, 2013) which is 1.3 times its EPC revenues of around Rs 8,000 crore in 2012-13 (refers to financial year - April 1 to March 31).

RInfra’s EPC order book has the potential to increase further due to captive opportunities from the group. However, CRISIL believes the current uncertainties in infrastructure and power sectors will limit any significant increase in the company’s EPC order book over the short term.

RInfra’s group company exposure increased significantly to Rs 12,600 crore as on March 31, 2013, from Rs 10,100 crore as on March 31, 2012, which is contrary to CRISIL’s expectations.

As per the management, a significant portion of the group company's exposure was utilised to fund Reliance Power Ltd’s (RPower’s) power projects, which potentially exposes RInfra to project-related risks.