Anil Ambani’s Reliance Power, Reliance Infra surge to near 5 year highs: What’s behind the bounce-back?

Anil Ambani’s Reliance Group is in focus, with shares of its companies, Reliance Power and Reliance Infrastructure trading near five-year highs. The surge comes on the back of reports that these companies are actively settling their debts.

Settling Reliance Power debt

Last week Reliance Power settled the debt owed to three lenders - ICICI Bank, Axis Bank, and DBS Bank, according to a report by The Economic Times. The report, quoting one of the lenders, said that the three banks together had about ₹400 crore and they almost recovered 30-35% of their principal loans.

One of the lenders said that Reliance Power is planning to become a debt-free company by the end of the current financial year (FY24). The banker also said that “the only debt on Reliance Power’s books will be the working capital loan from IDBI Bank”, the report added.

Reliance Infra dues settlement

Not only Reliance Power, but Anil Ambani’s Reliance Infrastructure is also actively working towards settling its dues. Reports suggest that the company is in talks with JC Flowers Asset Reconstruction Company to debt of ₹2,100 crore.

The original lender in this case was Yes Bank which had transferred its distressed loans to JC Flowers ARC. In January this year, Reliance Infrastructure had entered into a standstill deal with the asset reconstruction company, which meant that the ARC will not initiate any legal action against company until the end of March 2024.

The Share Prices

On the back of these developments, both Reliance Power and Reliance Infrastructure have made healthy gains in Wednesday's trading session. During initial trading, Reliance Power was up over 3%, while Reliance Infrastructure gained over 2%. Both the stocks are now near there five-year peaks. Remember, these stocks have traded at single-digit, low double-digit values for many years.

Anil Ambani’s Comeback

These debt settlements and the bounce back in value of shares mark a comeback for Anil Ambani, the younger brother of Asia and India’s richest person, Mukesh Ambani. In 2008, Anil Ambani had not only become the world's sixth wealthiest individual with a net worth of $42 billion, he was also richer than Mukesh Ambani. However, later his business empire received many setbacks and his wealth dwindled.