Reliance Power Hits 5% Upper Circuit; Stock Surges 100% Over the Past Year

Reliance Power shares were up 5% on Monday as the scheduled board meeting on September 23rd  considers raising long-term capital through both domestic and/or international markets.

Shares of Reliance Power rose to the upper circuit of ₹38.15 on the NSE by 4:45 pm IST marking a rise of 59% in its price during the year and doubling within 12 months with 101% rise as against 31% gain in the Nifty index for the same period.

This shares have witnessed an up-move for the eighth straight session. The market capitalisation of the company has increased to ₹15,328 crore. The stock has so far witnessed trading of over one crore shares at the BSE and NSE. The BSE turnover stood at 24.91 lakh shares while the turnover was ₹9.50 crore.

Since last week, the Anil Ambani-led Reliance Power has been back in the news after it announced that it was relieved of its corporate guarantee obligations pertaining to its subsidiary Vidarbha Industries Power Limited, which had accumulated a debt of ₹3,872.04 crore.

The company said it had reached an agreement with CFM Asset Reconstruction Private Limited, or CFM, and that it was pledging 100% of the equity shares of VIPL in favor of CFM. This led to the release of the corporate guarantee of Reliance Power.

As per the settlement agreement, Reliance Power and its subsidiaries, including Rosa Power Supply Company, VIPL, and CFM agreed to settle the above dues. The release deed was subsequently executed wherein all the legal cases and suits filed by both Reliance Power and CFM would be withdrawn. Also, the remaining balance 92.60% of shares of VIPL were mortgaged to Axis Trustee Services.

Reliance Power shares have a beta of 0.9, which reflects low volatility. The stock is trading above key moving averages, ranging from 5-day to 200-day. Its relative strength index (RSI) stands at 70.8, which indicates that the stock currently remains in the overbought zone.

Also read Reliance Power Wipes Out ₹3,872 Crore Debt, Becomes Debt-Free; Stock Hits Upper Circuit

Reliance Power will consider all available methods for raising long term funds, which may include the issue of equity shares, equity-linked securities, convertible warrants, or foreign currency convertible bonds through means like preferential allotment or qualified institutional placement - as per the recent filing with BSE, with its board meeting.

Last week, the firm's Secretary, Ramandeep Kaur, said that all obligations of the firm regarding the debt of VIPL have been paid back in full, and their corporate guarantee has been released due to that.

It annulled 222 crore shares of Reliance Power. On 22 August, the Securities and Exchange Board of India (SEBI) imposed a five year ban from the securities market on the promoter, Anil Ambani besides a penalty of ₹25 crore. Reliance Power promptly clarified that the ban did not touch its business as Ambani had quit the board with effect from 18 February 2022 after SEBI's interim order.

The company further stated that Axis Trustee Services, which worked on behalf of CFM and Axis Bank, had seized complete control of the share and management of VIPL. This was not even a related party transaction because the lenders were independent of Reliance Power's promoter group, said the company.