Shares of Anil Ambani-led Reliance Power and Reliance Infrastructure have surged over 61 per cent and 64 per cent, respectively, in the last one month
The month of September seems very favourable for Anil Ambani as the Reliance Group has made several announcements that lifted investor confidence in the group’s revival plans and long-term growth potential. Nearly 47 lakh retail investors saw the value of their stakes in RPower and RInfra grow by over 60% in the past month.
Shares of Reliance Power and Reliance Infrastructure have surged over 61 per cent and 64 per cent, respectively, in the last one month.
Earlier this year, SEBI banned Anil Ambani from the securities market for five years due to allegations of fund siphoning from Reliance Home Finance.
Despite the regulatory hurdles and volatility in the overall market, recent performance of Reliance Group stocks reflects a notable recovery and positive sentiment among investors. The continued upward trajectory is backed by a combination of factors including debt reduction, financial stability, and the prospects of new fundraising.
In the past one year, Reliance Power shares have gained 152 per cent as against BSE Sensex's rise of 28 per cent.
On Monday, September 30, despite opening lower at Rs 46.25 per share against the previous close of Rs 46.35, Reliance Power recovered losses and once again rallied to hit the upper circuit and 52-week high at Rs 48.66 on the NSE.
The rally comes ahead of a board meeting scheduled for Thursday, October 3, where the company is expected to consider a fundraising proposal.
Shares of Reliance Infrastructure Limited witnessed a significant rise in Monday’s trade after the company announced it won a Rs 780 crore arbitration case. The stock surged 7 per cent to hit a day high of Rs 345.45. In the last one year, the stock has gained over 93 per cent on the National Stock Exchange.
Journey Towards Zero Debt
Reliance Group is steadily moving closer to achieving debt-free status. On September 23, Reliance Power’s board approved the preferential issue with over Rs 600 crore coming from its promoter company, Reliance Infrastructure, and the remaining Rs 900 crore from Authum Investment and Infrastructure Limited and Sanatan Financial Advisory Services Limited.
The preferential issue is expected to boost Reliance Power’s net worth from Rs 11,155 crore to over Rs 12,680 crore, maintaining its zero-bank-debt status, according to the company stock market filing.
In addition, Reliance Infra’s board said it would consider raising funds from domestic or global markets on October 1. This comes after RInfra’s board gave its approval to raise Rs 3,014.3 crore through a preferential issue of up to Rs 12.56 crore equity shares at an issue price of Rs 240 per share.
The issue will involve investments from former Blackstone executive Mathew Cyriac, participating through Florintree Innovation, and equity investor Nimish Shah, investing via Fortune Financial & Equities Services. Together, they will contribute Rs 1,200 crore for a minority stake in Reliance Infrastructure.
As of March 2024, RPower’s total debt stood at Rs 4,199.83 crore compared to Rs 6,898.86 crore in March 2020. RInfra’s total debt reduced to Rs 3,059.84 crore in March 2024 from Rs 5,701.44 crore in March 2020.
Financial Stability
RPower bagged a major Battery Storage Contract of 500MW/1000MWh from the Solar Energy Corporation of India (SECI). The contract positions RPower as a key player in one of the world’s largest standalone battery energy storage projects.
The company has turned around from a net loss of Rs 388.84 crore in March 2020 to a profit after tax (PAT) of Rs 48.95 crore in March 2024.
Dispute Resolutions Strengthen Investor Sentiment
The sentiments around the stock received another major boost after the company settled all disputes with CFM Asset Reconstruction Private Limited (CFM), as 100 per cent shares of VIPL have been pledged in favour of CFM against the release and discharge of corporate guarantee given by Reliance Power.
The rally in Reliance Infra shares came after Anil Ambani’s company informed the exchanges that the Calcutta High Court has upheld a Rs 780 crore arbitration award in favour of the company in a dispute with West Bengal-based Damodar Valley Corporation.
Analysts are largely bullish on the prospects of the stock following the recent developments. "The stock appears to be rangebound at its current levels. Investors with a long-term perspective may consider holding onto it," said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.