Reliance Capital stock hits 20-year low

Reliance Capital is set to exit from two of its credit verticals which include Reliance Commercial Finance and Reliance Home Finance. Reacting to this news, the stock of the company declined by 13.6 per cent to hit Rs. 24.20, its lowest since March 1999.

Reliance Capital is a financial shareholder in Reliance Commercial Finance and Reliance Home Finance which cumulatively has assets over Rs. 25,000 crore. Hence, post the exit from these verticals, the debt of Reliance Capital will eventually reduce by Rs. 25,000 crore.

The company stated that this step is part of the business transformation process as it suffered great collateral damage over the last months owing to factors including the crisis in the financial services sector, actions by auditors and rating agencies and temporary slowdown of the Indian economy.

This exit is the second major exit by the ADAG group after shutting Reliance Communications, which is currently under bankruptcy process. According to market reports, the company’s defence business, Reliance Naval is under financial stress as well.

The company is also reported to have made interest and principal repayments of around Rs. 72.65 crore on a range of instruments which includes non-convertible debentures, term loans and inters corporate deposits.

On Monday, the stock of the company closed at Rs. 24.55, down by 12.32 per cent or Rs. 3.45 per share. The 52-week high is Rs. 298.5 and 52-week low is Rs. 24.2 on BSE.