Reliance Power Faces Turbulence Amid Market Slump

Anil Ambani’s Reliance Power Ltd seems to be hitting a rough patch. After an impressive 15-day winning streak, the company’s shares took a steep dive, falling by 5% on Friday. This marked a significant blow for Anil Ambani, sparking fears of a return to the company’s challenging past, where share prices hovered around the Rs 30 mark.

What’s Behind the Drop?

The fall in share price follows the announcement of a fundraising move involving Foreign Currency Convertible Bonds (FCCBs). Reliance Power’s board approved the issue of bonds worth Rs 4,200 crore ($500 million) at an ultra-low interest rate of 5% per annum. These bonds will be privately placed with affiliates of Värde Investment Partners, with a 10-year tenure, aiming to inject liquidity into the company.

Strategic Move or Risky Gamble?

Recently, Reliance Power made another bold decision, issuing 46.20 crore equity shares valued at Rs 1,524.60 crore to its parent company, Reliance Infrastructure Ltd. The allotment also involved non-promoter entities such as Authum Investment and Infrastructure Ltd and Sanatan Financial Advisory Services, represented by Sanjay Kothari and Meenakshi Sanjay Kothari. This move aligns with the company’s long-term goal to expand its footprint in the renewable energy sector, signaling that Anil Ambani might be banking on a pivot to cleaner energy.

Is Rs 30 on the Horizon?

With the sharp decline in share prices, investors and analysts are speculating whether the company’s stock might plummet back to Rs 30. Market reactions suggest that while the FCCB issuance could help with immediate financial woes, it might not be enough to keep Reliance Power afloat in the long run, especially with rising concerns over debt and market confidence in the Ambani brother’s empire.