The share price of SREI Infrastructure Finance fell over 15 percent on Monday after the firm said that the Reserve Bank of India would be conducting a special audit of the company and its subsidiary. The sentiment was further weighed after Brickwork ratings downgraded long-term ratings of the firm to BB from BBB-.
"We would like to inform you that a special audit of the Company and its subsidiary, Srei Equipment Finance Limited is being undertaken by an auditor appointed by Reserve Bank of India (RBI) in exercise of its powers under Section 45 MA(3) of the RBI Act, 1934," the company said in a BSE filing.
"Brickwork Ratings India Pvt Ltd (Brickwork) has revised the ratings for Perpetual Debt Instrument aggregating to Rs 10 crore of the company," SREI Infrastructure Finance said in a regulatory filing on Sunday.
Brickwork Ratings, in its review, said that the rating downgrade is mainly driven by continued stress on asset quality in the equipment and infrastructure financing loan portfolios, a significant decline in profitability, and stretched liquidity position of the company on account of low collections. The agency has also placed ratings of the company under 'watch with negative implications'.
The stock fell as much as 15.6 percent to Rs 5.66 per share on the BSE. In the last one year as well, the stock has fallen over 23 percent.
For the September quarter, the firm reported a drop of 91.5 percent in its consolidated net profit at Rs 4.72 crore in Q2. It had posted a net profit of Rs 55.37 crore in the year-ago period. Sequentially, the profit was also down from Rs 23.01 crore posted in the June quarter of the current fiscal year.
Total consolidated income of the financing company fell to Rs 1,182.21 crore during the July-September period of 2020-21 as against Rs 1,424.18 crore in the same period of 2019-20.
