Reliance Power shares hit 5% lower circuit for 3rd straight session

Shares of Reliance Power, a part of the Reliance Anil Dhirubhai Ambani Group, extended losing streak for the third straight session on Tuesday, hitting 5% lower circuit on all three occasions. The stock has been reeling under selling pressure as investors resorted to profit booking at higher levels after it touched a 7-year high of ₹54.25 on October 4, 2024.

The midcap stock had maintained an uptrend since September 12, gaining 72% in 15 sessions till October 3. The counter constantly touched its 5% upper circuit for 12 sessions, between September 16 and October 3.

On Tuesday, Reliance Power shares were locked in its 5% lower circuit at ₹46.01 on the BSE, with a market capitalastion of ₹18,482 crore. The Anil Ambani Group stock has fallen over 14% in the past three sessions.

Reliance Power, which had turned into a penny stock four years ago, has witnessed a significant recovery in its share price in recent times after the company showed some resilience to get back on track by repaying its debt and proposing to raise fresh capital. From its all-time low of ₹1.15 on March 27, 2020, the stock has grown multi-fold in four years as the company became a debt-free company.

The stock has turned multibagger in the last one year as the company took measures to clear its debt. The counter has surged 157% in a year; 92% year-to-date; 48% in six months; and 55% in a month.

In a board meeting on October 3, Reliance Power received approval to raise ₹4,200 crore ($500 million) through unsecured foreign currency convertible bonds (FCCBs). The company will issue up to 500 FCCBs of $10 lakh each in international offering on a private placement basis. The coupon rate is 5% per annum and the security tenure is 10 years and 1 day from the date of the FCCBs being fully paid-up. FCCBs will be allotted within 30 days from the issue closing date.

As per the regulatory filing, FCCBs will be convertible into approximately up to (82.30 crore) equity shares of ₹10 each of the company at the conversion price of ₹51 (including a premium of ₹41 per equity share. “The above conversion price is at a premium to the floor price calculated as the average of the weekly high and low of the closing prices during the two weeks preceding the relevant date i.e., October 03, 2024,” the release noted.

The board of RPower also approved the Employee Stock Option Scheme (ESOS), subject to the approval of the members of the Company. The company plans to issue up to 22,00,00,000 fully paid-up equity shares each of face value of ₹10 under the ESOS.

“The Options shall vest not earlier than minimum period of 1 (One) year and not later than maximum period of 4 (four) years from the Date of Vesting,” it added.

Last month, the cash-strapped company settled debt obligations worth ₹3,872 crore and achieved debt-free status as it has now zero debt from banks and financial institutions. Reliance Power settled all disputes with CFM Asset Reconstruction Private Limited (CFM).

Earlier 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 of March 31, 2022, was nearly ₹ 2,200 crore.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)