Shares of Reliance Power have surged significantly, hitting the 5% upper circuit limit following the announcement of a preferential issue worth ₹1,524.60 crore. This substantial move reflects the growing interest in share market investments, especially after the company declared plans to issue 46.2 crore equity shares at ₹33 each, which represents a 14% discount to the previous closing price.
The preferential issue will primarily be allocated to Reliance Infrastructure Ltd, the promoter, along with non-promoter entities such as Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services Private Ltd. Following this issue, Reliance Infrastructure will increase its stake to 24.88%, while the total shareholding of the promoter group will reach 24.95%. This move is a strategic step for Reliance Power to strengthen its financial standing in the share market.
Currently, Reliance Infrastructure owns 93.01 crore shares, accounting for 23.15% of Reliance Power as of June 30. Authum Investment and Infrastructure will acquire a 6.59% stake post-allotment, up from 1.91%, while Sanatan Financial Advisory Services will hold a 1.36% stake after the new shares are issued. These changes underscore the significant interest in Reliance Power, making it an attractive option for share market investments.
Reliance Power has reported zero bank debt on a standalone basis, which positions the company for growth in various sectors, especially renewable energy. The firm aims to utilise a substantial portion of the ₹803.60 crore proceeds from the preferential issue to enhance its renewable energy initiatives and explore new business ventures. This focus on sustainability is likely to attract more investors interested in share market investment.
The capital raised will serve multiple purposes, including enhancing the company's net worth, reducing existing debt, and meeting long-term working capital requirements. Reliance Power is also committed to improving shareholder value through strategic investments. The plan includes directing approximately ₹340 crore towards converting existing debt from Reliance Infrastructure, thereby strengthening its financial position.
In its regulatory filing, Reliance Power indicated that up to 25% of the issue proceeds would be utilised for general corporate purposes. This allocation covers operational expenses, corporate exigencies, and contingency management, which are essential for maintaining financial health. The company's strategic focus on long-term growth and stability aligns with the interests of shareholders and potential investors in the share market.
Until this morning, Reliance Power shares were locked at the upper circuit limit of ₹40.05 on the NSE. The stock has gained 67% this year, significantly outperforming the Nifty's returns of 19%. Over the past 12 months, Reliance Power has achieved a remarkable rise of 111%, more than doubling investors' capital, compared to the Nifty's 31% increase. This performance is a testament to the growing potential of share market investments in the company.
In summary, Reliance Power's recent developments, including the ₹1,525 crore preferential issue and strategic financial moves, reinforce its position in the share market. Investors looking to buy shares online may find this stock increasingly appealing, especially given its strong performance and growth trajectory. The combination of reduced debt and a focus on sustainable initiatives positions Reliance Power as a promising option for those engaged in share market investment.
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