Adani Power shares rise nearly 2% on setting up new subsidiary in Middle-East

Shares of Adani Power climbed nearly 2% in early trade on Tuesday after the Adani Group company launched a subsidiary in the Middle-East. The power arm of Adani Group has set up a wholly-owned subsidiary, Adani Power Middle East Ltd, in Abu Dhabi on August 26, 2024, it informed exchanges on Monday.

“We would like to inform that a wholly owned subsidiary with the name “Adani Power Middle East Ltd” has been incorporated in Abu Dhabi on August 26, 2024,” it said in a BSE filing post-market hours yesterday.

Adani Power Middle East Ltd has been set up with an authorised capital of 27,000 shares of $1 each, with an objective to invest in power, infrastructure, and related fields in the region. “Initial subscription to the share capital of 27,000 dollars divided into 27,000 shares with a nominal value of $1 each,” the release noted.

As per the release, 100% of the share capital in the subsidiary will be held by parent, Adani Power Limited.

Cheering the news, shares of Adani Power shares gained as much as 1.56% to ₹671.75 in the first two hours of trade so far. The stock opened higher at ₹665 against the previous closing price of ₹661.40 on the BSE.

At the time of reporting, shares of Adani Power were trading at ₹665.10, up 0.56%, with a market capitalisation of ₹2.56 lakh crore. At the current price, the power heavyweight was trading 35% lower than its 52-week high of ₹896.75 touched on June 3, 2024, while the stock has rallied 130% against its 52-week low of ₹289.30 hit on October 26, 2023. In the last one year, the counter has risen 106%, while it gained 17.5% in six months. In the calendar year 2024, the power stock has gained 27%, while it corrected over 7% in a month.

Last week, Adani Power received approval from the Hyderabad Bench of the National Company Law Tribunal (NCLT) for its ₹4,101 crore resolution plan for acquisition of power generation firm Lanco Amarkantak (LAPL). The acquisition, subject to conditions outlined in the resolution plan, is expected to be completed by October 20, 2024, within 60 days of NCLT approval.

Adani Power will acquire 100% shareholding in LAPL through an upfront cash payment, as part of LAPL’s Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code. The amount will be disbursed to secured financial creditors, with ₹4,000.13 crore allocated to those who voted in favour and ₹100.87 crore to those who did not, including Canara Bank, SIDBI, and UCO Bank.

LAPL owns and operates a 600 MW thermal power plant in Korba district of Chhattisgarh. The majority of power from Phase-I is supplied to Haryana and Madhya Pradesh DISCOMs under long-term Power Purchase Arrangements through Power Trading Corporation, APL informed via exchange filing. LAPL has a 2.784 MMT long-term fuel supply agreement with Coal India's subsidiary, South Eastern Coalfields (SECL). The company is also expanding its capacity with a 2×660 MW (1320 MW) plant under Phase II. The company generated a turnover of ₹1,308.33 crore in FY23-24.

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