The Anil Ambani group's Reliance Infrastructure (R-Infra), which has lost a third of its value since January this year, is expecting 22 of its 26 infrastructure projects to generate revenue in this financial year but investors are not enthused.
Apart from lack of progress in its power projects, investors are concerned over lack of rate revisions in the Delhi and Mumbai power distribution companies, plus increased competition from Tata Power in Mumbai. Besides, its infrastructure project in the city, including the Mumbai metro project connecting Ghatkopar to Versova, has been again delayed.
The stock is down 30 per cent since January, to Rs 367 on Tuesday, as compared to a 3.5 per cent fall in the Bombay Stock Exchange's benchamrk Sensex.
Analysts say closure of the Delhi airport metro rail line pushed back its traffic estimates, as well as leasing of property. Its Tilaiya ultra mega power project (UMPP, in Jharkhand) faces land acquisition issues. The Sasan and Chitrangi power projects (Madhya Pradesh) face regulatory disputes over use of coal from captive mines. Another big concern is cost escalation at power projects on exposure to imported equipment with unhedged forex risk for projects with local currency revenues.
Reliance Infrastructure's long-term issuer rating was today downgraded by India Ratings to 'IND AA-' from 'IND AA', with a stable outlook. Worsened debt metrics and inter-corporate deposits were some of the reasons, the rating agency said.
"The downgrade reflects the company's reduced liquidity on account of a decline in its cash balances, and increased support to the projects of its subsidiaries and associate companies. This is indicated by a rise in inter-corporate deposits," said its report.