Reliance Power share gains 5% on settling obligations worth ₹3,872 cr; achieves debt-free status
Shares of Reliance Power, a part of the Reliance Anil Dhirubhai Ambani Group, were locked in its upper circuit limit of 5% on Wednesday as sentiment was lifted after the cash-strapped company settled debt obligations worth ₹3,872 crore. With this, the company achieved debt-free status as it has zero debt from banks and financial institutions.
Cheering the news, Reliance Power shares gained as much as 5% to hit its upper circuit of ₹32.98 against the previous closing price of ₹31.41 on the BSE. The market capitalisation of the company rose to ₹13,250 crore, with nearly 41 lakh shares changing hands over the counter in the first hour of trade compared to two-week average volume of 46.52 lakh stocks.
The share price of Reliance Power has maintained an uptrend for five sessions, with the stock price rising 11.5% during this period. In the calendar year 2024, the counter surged 38%, while it climbed 73% in a year. It touched its 52-week high of ₹38.07 on August 23, 2024, and a 52-week low of ₹15.53 on October 26, 2023.
In the last one month, the stock has seen some correction after the capital market regulator, SEBI, barred its promoter, Anil Ambani and 24 others from the securities market for five years for the alleged diversion of funds from Reliance Home Finance Ltd (RHFL).
In an exchange filing last evening, Reliance Power said that it settled its obligation of ₹3,872.04 crore towards corporate guarantee to the lenders of Vidarbha Industries Power Limited.
“Reliance Power Limited (Reliance Power) today announced that the entire obligations of the Company as a Guarantor on behalf of Vidarbha Industries Power Limited (VIPL) stand fully settled resulting in release and discharge of Corporate Guarantee, Undertakings and all obligations and claims thereunder in relation to the outstanding debt of VIPL amounting to ₹3,872.04 crore,” it said in a BSE filing on Tuesday.
As per the release, Reliance Power has settled all disputes with CFM Asset Reconstruction Private Limited (CFM). “100% shares of VIPL have been pledged in favour of CFM against the release and discharge of Corporate Guarantee given by Reliance Power,” it noted.
Reliance Power, which had turned into a penny stock four years ago, has witnessed a significant recovery in its share price amid a slew of positive developments. From its all-time low of ₹1.15 on March 27, 2020, the stock has grown multi-fold in four years as the company showed some resilience to get back on track.
In January this year, the company signed an agreement with DBS Bank India for settlement of the entire obligations for its borrowings. In June last year, the cash-strapped company had reportedly settled ₹925 crore debt owed by its subsidiary in Rosa, Uttar Pradesh, from the fund raised from Singapore-based Varde Partners. In September 2020, Reliance Power and its subsidiaries had inked a pact with Varde Partners to raise debt of about ₹1,000 crore by offering 15% equity stake in the company. The outstanding loan of the company as on March 31, 2022, was nearly ₹ 2,200 crore.
For the first quarter ended June 30, 2024, Reliance Power posted a consolidated loss of ₹97.85 crore, which narrowed from ₹296.31 crore in the same period last year, on the back of improved income. The total income rose to ₹2,069.18 crore from ₹1,951.23 crore in the year-ago period.
Reliance Power is a power generation and coal resources company, having portfolios of power projects in the private sector, based on coal, gas, hydro and renewable energy. It has a commissioned portfolio of 5,300 megawatts.
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