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Reliance Infrastructure Ltd

| Quarterly Financial Results Q3 FY 2025-26

BEARISH SENTIMENT

Report Source

⬤31st Jan 26

Summary : Reliance Infrastructure faces severe financial distress, auditor resignation, and fraud investigations, with numerous subsidiaries having 'going concern' doubts, leading to a disclaimer of audit opinion.

Quarterly Report Analysis & Insights

Financial Disclosures

  1. Cost of Power Purchased: Q3 FY26: 2,437.59 Cr, 9M FY26: 10,571.43 Cr
  2. Employee Benefit Expenses: Q3 FY26: 326.89 Cr, 9M FY26: 924.22 Cr
  3. Finance Costs: Q3 FY26: 441.74 Cr, 9M FY26: 1,312.54 Cr
  4. Late Payment Surcharge: Q3 FY26: 408.26 Cr, 9M FY26: 1,247.46 Cr
  5. Depreciation/Amortization: Q3 FY26: 373.31 Cr, 9M FY26: 1,116.15 Cr
  6. Other Expenses: Q3 FY26: 517.34 Cr, 9M FY26: 1,494.27 Cr
  7. Total Expenses: Q3 FY26: 4,682.10 Cr, 9M FY26: 17,143.40 Cr
  8. Power Business: Q3 FY26: 4,332.12 Cr, 9M FY26: 16,863.91 Cr
  9. Engineering and Construction Business: Q3 FY26: 59.60 Cr, 9M FY26: 174.39 Cr
  10. Infrastructure Business: Q3 FY26: 373.02 Cr, 9M FY26: 1,080.22 Cr
  11. Others: Q3 FY26: 138.39 Cr, 9M FY26: 367.75 Cr
  12. Total Income from Operations: Q3 FY26: 4,903.13 Cr, 9M FY26: 18,486.27 Cr
  13. Late Payment Surcharge (LPSC) for Delhi Discoms, pending various forums.
  14. Arbitration claims and disputes for various toll road SPVs.
  15. Regulatory deferral account balance recovery by Delhi Discoms.
  16. ED, SEBI, SFIO proceedings.
  17. Total Assets (Consolidated): Q3 FY26: 69,617.10 Cr
  18. Total Liabilities (Consolidated): Q3 FY26: 52,690.47 Cr
  19. Unallocated Assets (Consolidated): Q3 FY26: 12,611.04 Cr
  20. Unallocated Liabilities (Consolidated): Q3 FY26: 51,106.02 Cr
  21. Scheme of Arrangement between Reliance Infra and Reliance Velocity Limited.
  22. Scheme of Arrangement between Reliance Aerostructure and Reliance Defence Systems.
  23. Dassault Reliance Aerospace Limited became an associate.
  24. SB Holding L.L.C-FZ became subsidiary, GDL - Reliance Solar Pte Ltd became Joint venture.
  25. Consolidated Net Profit/(Loss): Q3 FY26: 11.12 Cr, 9M FY26: 1,982.16 Cr
  26. Standalone Net Profit/(Loss): Q3 FY26: (139.64) Cr, 9M FY26: (632.06) Cr

Corporate Overview

  1. Predominantly conducted within India.
  2. Auditors unable to conclude on financial results due to insufficient evidence.
  3. Inability to determine recovery of Rs. 4,748.11 Crore in Odisha Discoms and unlisted entities.
  4. Ongoing ED, SEBI, SFIO proceedings and allegations of suspected fraud.
  5. Auditors resigning, citing company's reasons as incorrect, invalid, illegal.
  6. Multiple subsidiaries facing 'going concern' doubts due to financial distress.
  7. MMOPL: Net worth eroded, defaulted on loans, CIRP initiated, pending arbitration.
  8. GFTR: Overdue obligations, classified as NPA, CIRP commenced, pending arbitration.
  9. TKTR: Continuous losses, debt servicing issues, pending arbitration.
  10. TDTR: Liabilities exceed assets, referred to IBC, pending arbitration.
  11. HKTR: Negative net worth, loan defaults, CIRP initiated, termination notice.
  12. SUTR: Defaulted on loans, admitted in CIRP, pending arbitration.
  13. PSTR: NHAI suspended user fee collection, operational creditor filed for CIRP.
  14. JRTR: Concession agreement terminated, invoked arbitration for claims.
  15. KMTR: Concession agreement terminated, defaulted on loans, CIRP initiated.
  16. Delhi Discoms: DERC disallowances, appeals pending, LPSC issues, regulatory asset liquidation.
  17. Dependent on debt resolution, asset monetisation, and arbitration outcomes.
  18. Operates in Power, Engineering & Construction (E&C), and Infrastructure segments.
  19. Power segment includes generation, transmission, and distribution.
  20. E&C segment provides comprehensive construction and commissioning services.
  21. Infrastructure segment develops, operates, and maintains toll roads, metro rail, airports.
  22. Management confident in meeting obligations from warrants, arbitral awards, other sources.
  23. Management positive about recovering fair value of investments.
  24. Power Business
  25. Engineering and Construction Business
  26. Infrastructure Business
  27. Others
  28. Seeking authorization for issuance of Foreign Currency Convertible Bonds (FCCBs) up to US$ 600 million.

Risk Factors

  1. Auditors unable to conclude on financial results.
  2. Ongoing ED, SEBI, SFIO investigations.
  3. Multiple subsidiaries face 'going concern' doubts.
  4. Uncertainty recovering Rs. 4,748 Cr investments.

Key Drivers

  1. Favourable arbitration awards improve finances.
  2. Successful debt resolution and restructuring.
  3. Timely asset monetisation to discharge liabilities.
  4. Growing traffic for metro and toll roads.

Auditor’s Report

  1. Disclaimer of Opinion: Unable to obtain sufficient appropriate evidence for conclusion.
  2. Inability to determine recovery of Rs. 4,748.11 Crore investments.
  3. Ongoing ED, SEBI, SFIO proceedings and suspected fraud allegations.
  4. Auditor resignation and company's disagreement on reasons.
  5. Multiple subsidiaries facing 'going concern' doubts.
  6. Non-review of financial information for numerous subsidiaries and associates.
  7. Contingent liability regarding Late Payment Surcharge (LPSC) for Delhi Discoms.
  8. Rectification of accounting treatment for investment loss and fair valuation.
  9. Scheme of Arrangement between Reliance Infra and Reliance Velocity Limited.
  10. Exceptional items aggregating to Rs. 20.00 crore (net) and Rs. 1529.57 Crore (net).
  11. Delhi Discoms auditors referred LPSC matter as Emphasis of Matter.

Board Commentary

  1. Statutory Auditors, M/s Chaturvedi & Shah LLP, intimated intention to resign.
  2. Uncertainty exists regarding MMOPL's ability to continue as a going concern.
  3. GFTR, TKTR, TDTR, HKTR, SUTR, PSTR, JRTR, KMTR also face going concern doubts.
  4. ED searches, provisional attachment of properties, lien on bank accounts.
  5. SEBI Show Cause Notice for alleged fraudulent and unfair trade practices.
  6. SFIO notice calling for information.
  7. Auditor resignation and company's disagreement with reasons.
  8. Multiple subsidiaries facing CIRP under IBC.
  9. Ongoing arbitration proceedings with NHAI, MMRDA, HPWD, DERC.
  10. MIDC resuming possession of Airport SPVs lands.
  11. Approved seeking authorization for issuance of FCCBs up to US$ 600 million.

Corporate Governance

  1. Audit Committee deliberated auditor resignation.
  2. Nomination and Remuneration Committee approved ESOPs.
  3. Auditor resignation citing 'incorrect, invalid, illegal' reasons.
  4. ED searches, provisional attachment of properties, lien on bank accounts.
  5. SEBI Show Cause Notice for alleged fraudulent and unfair trade practices.
  6. SFIO notice calling for information.
  7. Auditors unable to obtain sufficient evidence for conclusion.

Management Discussion & Analysis

Future Strategy

  1. Provide necessary support to MMOPL for going concern operations.
  2. Take appropriate legal steps regarding ED/SEBI/SFIO matters.
  3. Issuance of FCCBs to raise capital.
  4. Scheme of Arrangement with Reliance Velocity Limited.
  5. Scheme of Arrangement with Reliance Defence Systems Private Limited.

Industry Overview

  1. MMOPL EBITDA expected to increase with growing ridership over 20 years.
  2. TKTR, TDTR, HKTR EBITDA expected positive with growing traffic.

Operational Focus Areas

  1. Debt resolution and restructuring.
  2. Asset monetisation.
  3. Pursuing arbitration awards and claims.
  4. Addressing regulatory asset liquidation issues.

Performance Drivers

  1. Favourable arbitration awards and claims.
  2. Debt resolution and restructuring of loans.
  3. Timely monetisation of assets.
  4. Growing passenger traffic for metro and toll roads.

Risk Control Measures

  1. Management confident in debt resolution, asset monetisation, arbitration proceeds.
  2. Company taking legal advice for ED/SEBI/SFIO matters.
  3. Subsidiaries preparing financial results on 'Going Concern' basis.
  4. Holding Company providing support to MMOPL.
  5. Arbitration awards received by GFTR, TKTR, TDTR.
  6. Issuance of FCCBs to raise capital.

Critical Risks

  1. Auditors unable to provide conclusion on financial results.
  2. Uncertainty regarding recovery of Rs. 4,748.11 Crore investments.
  3. Ongoing ED, SEBI, SFIO investigations and allegations of fraud.
  4. Auditor resignation and company's disagreement on reasons.
  5. Multiple subsidiaries facing 'going concern' doubts due to financial distress.
  6. Litigation risks from various arbitration proceedings.
  7. Regulatory non-compliance risks (SEBI SCN).
  8. Financial constraints and mismatch in cash flows for debt servicing.
  9. Impairment of Airport SPVs assets.
  10. Contingent liabilities related to Late Payment Surcharge (LPSC).