The Reliance Communications (RCom) stock closed 7.25 per cent lower today amid reports that there were no talks for an out-of-court settlement with Swedish communications equipment major Ericsson on a plea filed against the Anil Ambani firm and two of its subsidiaries seeking to recover Rs 1,150 crore. The stock closed 7.25 per cent lower at 15.35 on the BSE. The share which gained over 72 per cent in two days pared gains in last two hours of trade on reports denying any talks between the two firms.
However, later in a press release, Reliance Communications confirmed the development to the BSE and said, "We confirm that RCom and Ericsson are at an advanced stage of discussions to expeditiously resolve commercial issues. This will enable Reliance Communications to exit the NCLT process. RCom is confident to expeditiously proceed with its monetisation plan with Reliance Jio and overall Resolution Plan with the lenders, keeping in mind the interests of all stakeholders."
Earlier in the day, the stock was the top BSE gainer today. Ericsson, which inked a seven-year deal in 2014 to operate and manage RCom's nationwide telecom network is trying to recover over Rs 1,000 crore in dues from the Anil Ambani firm. National Company Law Tribunal had admitted three petitions filed by Ericsson against the telco and its subsidiaries and ordered bankruptcy proceedings against Reliance Communications. If the two parties reach a pact, they would have to approach the NCLT to repeal the order.
The stock has been on fire on the prospects that if a settlement outside NCLT is allowed, it may help RCom to move ahead with the sale of its telecom tower business to Anil Ambani's elder brother-run Reliance Industries for over Rs 23,000 crore, apart from monetising other assets including selling its sprawling DAKC premises to a Chinese lender. Reliance Communications owes around Rs 45,000 crore to as many as 31 domestic and international banks, including over Rs 10,000 crore to a Chinese lender.
At 12:02 pm, the stock was trading 14.80 percent higher at 19 level on BSE. It hit an intra day high of 20.65 level in trade today. The stock has risen 72.71% in two sessions. On Thursday, the stock closed 57 percent higher to 16.55 on BSE. Buying was also seen in other ADAG stocks, with Reliance Naval and Engineering rising 33.07 per cent, Reliance Capital (4.64 per cent) and Reliance Infrastructure (3.21 per cent) yesterday.
Today, Reliance Naval stock rose 8.88%, Reliance Capital down 0.79% and Reliance Infrastructure up 0.06% on the BSE.
The stock opened with a gain of 9.97% today. The stock has been highly volatile with an intra day volatility of 9.03% (calculated on the basis of weighted average price). The stock has given 38.32% returns during the week against sectoral returns of -4.37%. The stock has fallen by 33.27% during the last three months.
Due to mounting losses, the company began to wind down its mobile operations from last November. It was also not servicing the debt for many quarters before that as it was looking to recast the loans but did not materialise and since then many of its creditors had taken RCom to bankruptcy court. The company is set to report earnings for the quarter ended March on May 19.
The market valuation of other companies of Anil Ambani are not anywhere close their peaks. Reliance Power, which had a Rs 11,700 crore IPO in 2008, is now valued at Rs 10,000 crore, lower than the capital it raised from IPO. The peak valuation of Reliance Power was over a lakh crore in February 2008. The engineering, procurement and construction (EPC) firm, Reliance Infrastructure is the largest in the group according to the market capitalisation at over Rs 10,400 crore. Reliance Capital is the third largest company in the group considering the valuation in the market at Rs 9,900 crore, though the company's value is one seventh of its peak. Reliance Naval & Engineering (RNE), the erstwhile Pipavav Shipyard which was acquired by Reliance Infrastructure in 2015, is valued Rs 1,240 crore.
The total market value of the Anil Ambani's Reliance Group companies comes to around Rs 36,000 crore now, compared to aggregate peak values of over Rs 4 lakh crore. For comparison, his elder brother Mukesh Ambani's Reliance Industries is valued just below Rs 6 lakh crore in the market.