Anil Ambani Group Stocks Experience Significant Resurgence in September

In September 2024, the stocks of companies under the Anil Ambani Group witnessed a remarkable rally, marking a significant resurgence after a period of underperformance. Both Reliance Infrastructure and Reliance Power noted a 60% increase in their stock values, attributed to a series of positive developments that have re-energized investor confidence.

One of the pivotal factors driving this turnaround was the companies’ strategic focus on debt restructuring and operational improvements. Reliance Infrastructure’s shares soared by 60% last month, closing at ₹336.20 per share, marking their highest value since December 2018. The boost in investor sentiment was further fueled by the company’s recent arbitration victory, amounting to ₹780 crore, over Damodar Valley Corporation.

Furthermore, Reliance Infrastructure has made substantial progress in resolving its financial obligations. It has settled debts with Edelweiss Asset Reconstruction Company for ₹235 crore, addressing non-convertible debentures, and has cleared outstanding dues with prominent lenders including the Life Insurance Corporation of India (LIC) and ICICI Bank.

Additionally, the company achieved a significant milestone by reaching a mutual settlement with Adani Electricity Mumbai Limited and Adani Energy Solutions Limited. This led to the withdrawal of all arbitration claims, as reported in an exchange filing dated September 17, 2024. Reliance Infrastructure is primarily involved in power distribution in Delhi and provides EPC services, among other operations in defense and infrastructure sectors.

In conjunction with these developments, Reliance Infrastructure is planning to raise up to ₹6,014 crore through the issuance of shares and convertible warrants to bolster its capital.

Parallel to Reliance Infrastructure, shares of Reliance Power, a subsidiary company, witnessed a similar rally, also climbing 60% in September. The stock reached ₹48.6 per share, the highest since January 2018, backed by momentum from banks and financial institutions. This was notably after the company fulfilled its obligations as a guarantor for Vidarbha Industries Power Limited (VIPL), resulting in the release from a corporate guarantee of ₹3,872.04 crore in outstanding debt.

Looking forward, the board of Reliance Power has scheduled a meeting on October 3, 2024, to deliberate on raising long-term funds from both domestic and international markets. The company aims to acquire capital to facilitate its expansion into the renewable energy sector.

It is important to note that in August 2024, the Securities and Exchange Board of India (SEBI) imposed a five-year ban on Anil Ambani, the chairman of the Reliance Group, from the securities market, coupled with a fine of approximately $3 million over allegations of fund diversion. This regulatory action underscores ongoing challenges faced by the conglomerate, even as it makes strides in regaining financial stability.