Following the reports on Wednesday that Anil Ambani-led Reliance Power has paid off its debts, the company’s share price moved up by 11.91 percent on NSE in the last two trading days, from Rs. 23.5 on March 20th to Rs. 26.3 on March 22nd.
With a market capitalisation of Rs. 10,012 crores, the shares of Reliance Power Limited closed in the green at Rs. 26.3, up by nearly 5%.
According to the sources, the company cleared debts owed to three banks: ICICI Bank, DBS Bank and Axis Bank, while Reliance Infrastructure, the parent company, is working towards clearing the dues of around Rs. 2,100 crore to JC Flowers Asset Reconstruction Company.
Reliance Infrastructure and JC Flowers ARC had signed a standstill agreement, which was initially valid until March 20 this year but was recently extended to March 31st.
According to the standstill agreement, JC Flowers ARC will not initiate any legal action against Reliance Infrastructure until March 31, allowing the company time to arrange funds.
Reliance Power is aiming to become a debt-free company by the end of FY23-24, with the working capital loan from IDBI Bank remaining the only debt on the company’s books following this repayment, as reported by ET.
Furthermore, the three lenders had a combined exposure of about Rs. 400 crore to Reliance Power and have recovered between 30-35% of their principal loans.
Last year, Reliance Commercial Finance, a wholly-owned subsidiary of Authum Investment & Infrastructure, invested Rs. 1,043 crore in both companies under the Anil Ambani group.
According to the March 13th filings on stock exchanges, Reliance Power raised Rs. 240 crore equity from VFSI Holdings, a subsidiary of Varde Partners (a global asset manager), and the proceeds were probably used to settle the dues of the banks, mentioned in the ET.
The first investment was Rs. 891 crore in Reliance Infrastructure, while the second investment was valued at Rs. 152 crore in Reliance Power. This helped address the debt issue, while Reliance Power benefited from the capital infusion provided by the shares.
As of December 2023, Reliance Power stated to the exchanges that its total financial indebtedness stood at Rs. 765 crore, while Reliance Infrastructure indicated that its total financial indebtedness was Rs. 4,233 crore.
In the last one year, Reliance Power has delivered about 164.3 percent of multibagger returns and nearly 38.8 percent positive returns in the last six months. So far in 2024, it has given positive returns of around 9.8 percent.
In terms of financials, the company’s revenue from operations grew by 3.23 percent YoY from Rs. 1,886 crore in Q3 FY22-23 to Rs. 1,947 crore in Q3 FY23-24.
However, the net profit growth of the company is Rs. -1,137 crore in Q3 FY23-24 falling by 364.08 percent from a loss of Rs. 245 crore in Q3 FY22-23.
As of March 2024, FIIs hold 13.16 percent of the shares, whereas DIIs hold 4.94 percent of the shares in the company, aggregating to 18.1 percent of the institutional holdings.
Reliance Power Limited, a part of the Reliance Group, is engaged in the business of developing, constructing and operating power projects in India as well as worldwide.
The company on its own and through its subsidiaries has a large portfolio of power generation capacity, both in operation as well as capacity under development.
Written by Shivani Singh
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