Stocks

No respite for ADAG stocks

Manisha Jha K.S. Badri Narayanan Mumbai/Chennai | Updated on March 22, 2013 Published on March 22, 2013

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Investors running out of patience, say analysts

It is not a good scorecard to read for Anil Dhirubhai Ambani Group stocks. Reliance Power is ruling at the lowest point since its listing on the bourses, while Reliance Broadcast Network hit its life time low on Thursday. Reliance MediaWorks, which was listed in 2001, hit a 5-year low on Friday, and Reliance Communications, Reliance Infrastructure and Reliance Capital are very close to the lowest level they touched in the last five years.

Reliance Power closed at its new low of Rs 62.25, down 0.72 per cent on Friday; Reliance MediaWorks at Rs 47.15, down 2.98 per cent, while Reliance Capital ended the day at Rs 312.10, down 0.64 per cent. Reliance Communications at Rs 54.05, down 1.64 per cent while Reliance Broadcast and Reliance Infrastructure closed at Rs 24.55 and Rs 342.85, up 0.20 per cent and 1.72 per cent respectively.

Negative image

According to market watchers, who track Reliance group companies closely, patience among traditional Reliance investors has run out due to issues of corporate governance, overleveraged balance-sheets and liquidity crunch coupled with weak financial performance.

Besides sector-specific activities such as regulatory overhangs (RCom), concerns over coal and gas supplies (RPower) and weak economy and high interest rate (Reliance Infrastructure) have also played important role, said analysts.

“These stocks have been battered owing to the negative image of the overall ADAG conglomerate and it seems to have lost the critical in-house support from its group companies lately. There has hardly been any fresh buying witnessed in the stock. Offloading of shares by group companies to adjust losses could also be another reason,” said an institutional broker, Suresh Parmar.

Desperation

According to Gaurang Shah, Assistant Vice-President, Geojit Paribas, the recent fall in their stock value could have been triggered by investors’ frustration and fast running out patience.

“These stocks have continued to show a dismal performance in terms of quarterly earnings and growth visibility. The negative impact of ADAG stocks on eroding investor wealth has been significant and the way it has been sold off reflects the desperation among investors to exit the stock. Of all the group stocks, Reliance Infra is the only one likely to take the least knock.”

manisha.jha@thehindu.co.in

Published on March 22, 2013
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