Reliance Power Shares Fall Over 4% Ahead of Fundraising Plans Board Meeting

New Delhi, 30 September 2024 – Shares of Reliance Power Limited, owned by Anil Ambani, took a hit today as they fell by over 4% in early trading. This comes ahead of the company’s crucial board meeting scheduled for Thursday, October 3, 2024, where discussions on raising long-term funds are expected to dominate the agenda. The drop in share price comes as the market anticipates the board’s decision on the company’s future financial plans.

Reliance Power Share Price Movement

Reliance Power, which has seen a 44% surge in its stock price over the past two weeks, experienced a sharp decline today, with shares falling by 4.33%. The stock reached a low of Rs 44.35 on the Bombay Stock Exchange (BSE), down from the previous closing price of Rs 46.35. The total trading volume during the day was 80,198,447 shares, with an average trading price of Rs 45.16.

On the National Stock Exchange (NSE), the trading volumes were similarly high, with 5,419,065 buy orders and 12,315,989 sell orders. This sudden dip comes amid heightened anticipation surrounding the upcoming board meeting and the potential impact of new fundraising measures on existing shareholders.

Agenda for the Board Meeting

The primary focus of the upcoming board meeting will be to explore various options for raising long-term capital from both domestic and international markets. The company’s board is expected to discuss different avenues for raising funds, including:

• Issuance of equity shares or equity-linked securities.
• Issuing warrants convertible into equity shares.
• Exploring qualified institutional placements (QIP), preferential issues, rights issues, or even foreign currency convertible bonds (FCCBs).

The decision on the method of fundraising will be determined by the board during the meeting, and the company will seek necessary regulatory approvals to proceed with the chosen method.

Recent Share Allotment and Capital Infusion

Reliance Power has already been in the news recently due to its preferential issue of 46.20 crore shares, amounting to Rs 1,524.60 crore. These shares were allotted to Reliance Infrastructure Ltd, which is the promoter of Reliance Power, along with two non-promoter entities—Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services Private Ltd.

A substantial portion of the funds raised, approximately Rs 803.60 crore, is expected to be utilized for expanding Reliance Power’s renewable energy portfolio. The company has also expressed its intent to invest in new business opportunities and meet its long-term working capital requirements.

Debt Settlement and Financial Position

Reliance Power has made significant strides in reducing its debt burden. The company recently declared that it now holds zero debt from banks and financial institutions, marking a major milestone in its financial restructuring efforts. As of June 30, 2024, Reliance Power’s net worth stands at Rs 11,155 crore.

This debt reduction follows the resolution of a long-standing dispute with CFM Asset Reconstruction Private Limited. As part of the settlement, Reliance Power pledged 100% of the shares of its subsidiary, Vidarbha Industries Power Limited (VIPL), enabling the release of a corporate guarantee, which further strengthened the company’s financial position.

Future Outlook

With its recent capital infusion and plans to expand its presence in the renewable energy sector, Reliance Power is positioning itself for future growth. The upcoming board meeting is expected to lay the groundwork for the company’s fundraising efforts, and the market is eagerly waiting to see how the board navigates these opportunities. While today’s dip in share prices may have caused some concerns, the company’s long-term prospects remain promising.

The focus on renewable energy, combined with a clean debt sheet, indicates that Reliance Power is gearing up for a new phase of growth and diversification. However, how the fundraising measures affect existing shareholders and the stock’s performance in the near term will depend on the outcome of the October 3 board meeting.