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Reliance Power shares hit 5% upper circuit for 6th straight day, reach fresh 52-week high. Here’s why

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Reliance Power shares hit 5% upper circuit for 6th straight day, reach fresh 52-week high. Here’s why

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Shares of Reliance Power surged to a new 52-week high, hitting their 5% upper circuit for the sixth consecutive session on Tuesday at Rs 42.06 on the BSE.

The stock has been in the spotlight recently, with its latest rally following a significant announcement made during the company’s board meeting on Monday. Reliance Power’s board approved the issuance of up to 46.2 crore equity shares and/or warrants worth Rs 1,525 crore through a preferential allotment.

In a filing to the exchanges, the company stated, “The Board of Directors, at its meeting held on Monday, September 23, 2024, has approved the issuance of up to 46.20 crore equity shares and/or warrants convertible into equity shares at an issue price of Rs 33 per share, aggregating Rs 1,524.60 crore through preferential allotment.”

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Reliance Infrastructure Limited, the company’s promoter, will increase its equity stake by over Rs 600 crore. Other investors participating in this preferential issue include Authum Investment and Infrastructure Limited and Sanatan Financial Advisory Services Private Limited.

The funds raised from the preferential issue will be used to expand business operations, either directly or through investments in subsidiaries and joint ventures. A portion of the proceeds will also be allocated to reducing debt and for other general corporate purposes.The stock had already been on an upward trajectory last week when Reliance Power announced it had settled obligations amounting to Rs 3,872.04 crore. These obligations were related to guarantees provided to the lenders of Vidarbha Industries Power Ltd. (VIPL).Additionally, the company confirmed that it had resolved all disputes with CFM Asset Reconstruction. In exchange for the release and discharge of Reliance Power’s guarantee, 100% of VIPL’s shares have been pledged to CFM.

Reliance Power shares have experienced a remarkable 73% increase year-to-date and have delivered impressive multi-bagger returns, soaring 120% over the past year.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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