Is Reliance Power set to break new ground amid its recent surge in share price?
In the buzzy world of stock markets, penny stocks often attract investors attention. These low-priced shares, typically trading below Rs 100 per share, hold attraction for those seeking potential high returns.
In the Indian context, as the nation focuses towards automation and electrification, the power sector emerges as a focal point for investors studying penny stocks.
Reliance Power
On March 20, 2024, Reliance Power's share price experienced a surge, hitting in the upper circuit band of 5 per cent. Data from the Bombay Stock Exchange (BSE) revealed a scene dominated by buyers, hinting at the possibility of sustained momentum in the coming trading sessions.
Reasons Behind the Surge
1. Reliance Power's recent surge is fueled by its effort to reduce debts, notably settling dues with ICICI Bank, Axis Bank, and DBS Bank. Moreover, the company aims to achieve a debt-free status by the end of the fiscal year, with only a working capital loan from IDBI Bank remaining, according to The Economic Times report.
2. By repaying debts and focusing on financial discipline, Reliance Power demonstrates prudent financial management. This move not only relieves financial burdens but also instills confidence in investors regarding the company's stability.
3. The injection of capital by promoters and Reliance Commercial Finance has improved Reliance Power's financial outlook. This infusion provides the company with resources to fuel growth initiatives.
4. In its September 2023 quarterly earnings, the company reported a narrowing consolidated net loss, with increased revenues.
5. Moreover, Reliance Commercial Finance's substantial investment proposal in Reliance Infrastructure and Reliance Power created confidence in the group's prospects.
Reliance Power, led by Anil Ambani, is on track to clear its debts, with only a working capital loan from IDBI Bank remaining on its books, as per reports. Moreover, the recent capital infusion and investment proposals from Reliance Commercial Finance, a subsidiary of Authum Investment & Infrastructure, have further supported Reliance Power's financial standing.
An investment proposal of Rs 10.4 billion in Reliance Infrastructure and Reliance Power signifies a vote of confidence in the company's growth trajectory. Authum's agreement to become a shareholder in Reliance Infra and Reliance Power has not only helped in addressing debt concerns but also provided Reliance Power with substantial capital infusion.
Reliance Power shares
The shares of Reliance Power on Thursday at 11:27 am IST were trading at Rs 25.05, up by 4.81 per cent.
