Why are Reliance Infra, Reliance Power shares under pressure today?

Shares of Reliance group companies were under pressure on Monday with Reliance Infrastructure and Reliance Power sinking the most in line with a weak broader market. Reliance Infrastructure shares declined as much as 8.7%, while Reliance Power dropped 4.9% during the day’s trade so far. In comparison, the BSE benchmark Sensex was down 455 points, or 0.8%, at 56,906 levels.

The two Reliance group firms witnessed a surge in selling after Anil Ambani stepped down from the boards of directors of the companies, following the Securities and Exchange Board of India's (SEBI) order restraining him from trading in securities or being associated with any listed companies. Adding to the woes, the debt-laden companies face insolvency proceedings as they failed to pay their lenders.

"Anil D Ambani, non-executive director, steps down from the board of Reliance Power in compliance of SEBI (Securities and Exchange Board of India) interim order," Reliance Power said in a BSE filing after market hours on Friday. Similarly, Reliance Infrastructure also informed the exchange about the resignation of Anil Ambani from its board of directors.

Reacting to the news, Reliance Infrastructure shares opened with a loss of 6.55% at ₹102 on the BSE, against the previous close price of ₹109.15. Extending opening losses, the stock plunged 8.7% to hit a low of ₹99.65 in the first two hours of day’s trade so far. The market capitalisation of the smallcap stood at ₹2,698.28 crore.

The stock price has been falling for the past seven sessions and has dropped nearly 13% during the period. It has slipped 1.5% in a month and 3.3% in six month period. It has delivered a positive return of 7.5% since the beginning of 2022 and 181% in a year.

In a similar trend, Reliance Power belled with a 3% loss at ₹12.59, while it tumbled 4.9% to touch a low of ₹12.35 on the BSE. There was a spurt in volume trade as 35 lakh shares worth ₹4.4 crore changed hands over the counter as compared to the two-week average volume of 48.18 lakh stocks. The market capitalisation of the energy company dropped to ₹4,239.96 crore. The stock has dropped 9% in a week and nearly 5% in one month. Despite this, the stock has given a strong return of 165% to its shareholders in the past one year.

In a separate development, Reliance Infrastructure said in an exchange filing that its financial creditor, SREI Equipment Finance Limited, has filed an insolvency proceeding against the company in relation to a due amount of ₹38.6 crore.

“We wish to inform that the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, has been filed by a financial creditor, namely SREI Equipment Finance Limited, in relation to an amount of ₹38.6 crore," it said. “No notice in relation to the above has yet been issued by NCLT to the company. This disclosure is being made as an abundant caution.”

The company further stated that it is engaged in bilateral discussions to resolve the matter outside IBC and taking requisite steps.

Reliance Power also informed the exchange that an insolvency proceeding has been filed against the company and its subsidiary Reliance Natural Resources Limited (RNRL) by Piramal Capital and Housing Finance Limited in relation to a financial claim of ₹526.10 crore due from RNRL.