Shares of Sunil Mittal-led Bharti Airtel cracked almost 6% in early morning commerce on Friday after Moody’s Investors Service positioned the Telecom company’s score on review for downgrade. Reports on Thursday stated Moody’s has positioned Bharti Airtel’s score on review for downgrade following low ranges of profitability and expectation of weak money move. Following the report, Bharti Airtel share price slipped 5.8% to an over one-week low of Rs 288.7 per share on the National Stock Exchange.
On the BSE, Bharti Airtel share price slipped by 5.2% to a low of Rs 290 per share in early morning commerce right this moment. Bharti Airtel was the highest loser on each the BSE Sensex and NSE Nifty on Friday. According to a press release issued on Thursday, the US-based company Moody’s has positioned on review for downgrade the ‘Baa3’ issuer and senior unsecured score of Bharti Airtel and the scores on the backed senior unsecured notes issued by Bharti’s wholly-owned subsidiary, Bharti Airtel International (Netherlands) B V.
Also learn: Share market LIVE updates! Sensex, Nifty get better from day’s lows; Bharti Airtel high index drag; rupee positive aspects as crude eases
‘Baa3’ is the bottom investment-grade bond scores. Any downgrade would put the score in speculative grade. Moody’s Vice President and Senior Credit Officer Annalisa DiChiara stated: “The review for downgrade is primarily driven by our expectation that Bharti’s cash flow generation will remain weak and leverage elevated… Because we believe a more rational competitive environment in India’s Telecommunications market is unlikely over the next 12-18 months, the review also reflects uncertainty as to whether the company’s profitability, cash flow situation and debt levels can improve sustainably and materially over the same period.” DiChiara is Moody’s lead analyst for Bharti.
The review additionally displays the company’s low ranges of profitability, significantly from its core Indian cellular operations, unfavourable free money move and better debt ranges to fund capital spending, it stated. According to Moody’s, the review on Bharti’s score will deal with the company’s commitments and plans to considerably scale back debt ranges considerably over a brief time period; and plans to turnaround the underlying Indian cellular operations. While nearly all of the USD 1.25 billion raised from the pre-IPO of its African enterprise shall be used to scale back debt, leverage will solely enhance marginally, Moody’s stated.