In a significant turnaround, Anil Ambani-led Reliance Power has made headlines with its impressive debt repayment and financial revival. The company's subsidiary, Rosa Power, has recently prepaid ₹850 crore of its debt to Singapore-based lender Varde Partners, marking a crucial step towards achieving a debt-free status.
This move follows a series of debt repayment initiatives by Reliance Power. Since December 2023, the company has been diligently repaying its massive debts, including loans amounting to ₹1,023 crore by March 2024 and an additional ₹800 crore in August. Most recently, Reliance Power settled a ₹3,872 crore loan with banks, securing its debt-free status.
Impact on Share Price and Market Capitalization
The debt repayment has had a profound impact on Reliance Power's share price and market capitalization. The company's shares have surged, hitting a 52-week high on the NSE at ₹44.15, a significant rise from the 52-week low of ₹15.55 recorded on October 26, 2023. This upward trend has resulted in the shares trading at their upper circuit for several consecutive days.
As of September 2024, Reliance Power's market capitalization has increased substantially, reaching ₹17,734.93 crore. This growth reflects a year-long process of recovery, with the company's valuation increasing by ₹9,853 crore from its previous market cap of ₹6,238 crore.
Fresh Equity and Investor Confidence
To further bolster its financial health, Reliance Power is set to raise an additional ₹1,525 crore through the issuance of fresh equity shares or convertible warrants to its promoters and select investors. High net worth individuals, including Sanjay Dangi and Sanjay Kothari, are poised to invest ₹925 crore in the company. This investment is part of Reliance Power's strategy to reduce debt and support its green energy initiatives.
Reliance Infrastructure, the promoter of Reliance Power, will invest ₹600 crore, increasing its stake in the energy unit to 25% from the current 23%. Sanjay Dangi's investment vehicle, Authum Investment and Infrastructure, will own over 6% of Reliance Power after the allotment, while Sanjay Kothari's Sanatan Financial Advisory Services will acquire a 1.7% stake.
Regulatory Developments and Future Outlook
In addition to its financial milestones, Reliance Power has also received favorable regulatory news. The National Company Law Tribunal (NCLT) Mumbai has approved the withdrawal of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, filed by CFM Asset Reconstruction Private Limited against Reliance Power.
This positive trajectory for Reliance Power comes after a period of significant challenges faced by Anil Ambani, including regulatory issues and the near-collapse of other group companies like Reliance Capital. However, with the support of his sons and strategic financial moves, Anil Ambani appears to be making a strong comeback.
Conclusion
Anil Ambani's Reliance Power has embarked on a remarkable journey from being debt-ridden to achieving financial stability and growth. With its debt-free status, increased market capitalization, and fresh investments, the company is well-positioned to explore new business opportunities, particularly in the renewable energy sector. This turnaround is a testament to the company's resilience and strategic financial management.
