New Delhi: It seems that the road is not smooth for IL&FS as the shares of the group dropped up to 16 per cent and hit their 52-week lows in Monday’s trade after Moody’s affiliate ICRA downgraded parent IL&FS second time in a month.
With the parent IL&FS being downgraded, analysts believe there is a risk of lower ratings for its subsidiaries – IL&FS Transportation, IL&FS Tamil Nadu Power, IL&FS Energy Development, IL&FS Security Services, and IF&FS Financial Services.
Following the development, shares of IL&FS Transportation fell 15.95 per cent to hit a 52-week low of Rs 25.30 on BSE. Another group stock IL&FS Investment Managers declined 15.36 per cent to hit a 52-week low of Rs 9.7 on BSE. IL&FS Engineering dropped 5 per cent to Rs 16. This was the engineering stock’s 52-week low level.
ICRA has cut the rating on Rs 5,225-crore in non-convertible debentures and Rs 350 crore in loans of IL&FS sharply to BB from AA+, the second downgrade after it had cut the rating from AAA to AA+ on August 7.
The downgrade means that the company is now rated junk, making it difficult for it to access the market.
In its note on Saturday, ICRA had said the downgrade of ratings takes into account the increase in liquidity pressure at the group level. In a routine audit two months ago, the Reserve Bank of India (RBI) directed IL& FS to raise capital quickly and prune debt.
The company has already made public its intention to raise Rs 4,500 crore by selling shares to shareholders in a rights issue.