Reliance Power Shares Drop 4% Ahead of Key Board Meeting on Fundraising Plans

Reliance Power shares : Mumbai, 30 September 2024 – Shares of Reliance Power, led by Anil Ambani, took a hit of over 4% during Monday’s trading session, ending a two-week surge where the stock had gained 44%. The stock dropped by 4.33%, reaching a low of Rs 44.35 on the BSE. This fall came just days before a crucial board meeting scheduled for Thursday, October 3, where the company plans to discuss raising long-term capital from both domestic and international markets.

Key Board Meeting: Fundraising Agenda

Reliance Power’s board of directors is set to meet on October 3 to explore options for raising funds. The company plans to issue equity shares, equity-linked securities, or warrants convertible into equity shares as part of its capital-raising strategy.

There’s also the possibility of a preferential issue and/or a qualified institutional placement (QIP) to raise funds. In addition to these, the board will consider options like rights issues and foreign currency convertible bonds (FCCBs). One of the key decisions to be made during this meeting will be determining the issue price for these instruments.

This meeting is highly anticipated by investors, especially given the company’s efforts to strengthen its financial position and expand into renewable energy.

Recent Equity Allotment Boost

Reliance Power has already taken steps to raise capital. Recently, the company allotted 46.20 crore equity shares worth Rs 1,524.60 crore via a preferential issue to Reliance Infrastructure Ltd, its promoter, along with two non-promoter entities: Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services Pvt Ltd. Sanatan Financial is owned by Sanjay Kothari and Meenakshi Sanjay Kothari.

This allotment has drawn significant attention from market watchers. The funds raised from this issue are expected to support Reliance Power’s expansion into the renewable energy sector, a key focus area for the company moving forward.

Strategic Fund Utilization

Reliance Power intends to channel a large part of the Rs 1,524.60 crore raised into renewable energy projects. Specifically, Rs 803.60 crore will be directed towards enhancing its presence in the growing renewable energy market. The company is also keen to explore new business opportunities and improve its long-term working capital structure.

The move to prioritize renewable energy aligns with global trends and is expected to significantly boost the company’s growth prospects.

Financial Health and Debt Reduction

On the financial front, Reliance Power recently reported zero debt from banks and financial institutions, marking a notable improvement in its balance sheet. As of June 30, 2024, the company’s net worth stood at Rs 11,155 crore.

This positive development came after the company successfully settled disputes with CFM Asset Reconstruction Pvt Ltd, which allowed it to release a corporate guarantee and pledge 100% of its subsidiary VIPL’s shares.

Stock Performance: A Year of Strong Growth

Despite the recent dip, Reliance Power shares have shown a strong upward trajectory over the past year. The stock has risen by 50.81% in the last month alone, while over the last six months, it has surged by 57.06%. Year-to-date, the company’s shares have climbed 89.35%, highlighting the company’s positive momentum in the current fiscal year.

Over the past twelve months, Reliance Power stock has delivered a return of 135.43%, making it an attractive option for long-term investors. The company’s ongoing efforts to strengthen its financials and focus on renewable energy have likely contributed to this sustained growth.

Future Outlook

As Reliance Power prepares for its board meeting, the outcome will be closely watched by investors and analysts alike. The company’s plans to raise capital and its commitment to renewable energy signal that it is gearing up for future growth and expansion.

Reliance Power’s performance in the stock market, coupled with its strategic decisions, suggests that the company is on a solid path toward strengthening its position in the energy sector.

Investors will be keen to see how the fundraising plans unfold and what impact they will have on the company’s financial health and stock performance in the months ahead.