 "power reforms")
Urban electrification is just a glimmer of its full potential
Reliance Power’s share price was stuck in a 5 per cent lower circuit at Rs Rs 40.06 a piece on the BSE. This decline was followed by the company’s announcement to raise funds from subsidiaries of US-based Värde Investment Partners.
The company’s board of directors has approved fundraising of $500 million (around Rs 4,200 crore) through issuance of foreign currency convertible bonds (FCCB). These bonds will be offered as a private placement to a US company, with a low interest rate of 5 percent per annum and a tenor of 10 years. FCCBs are unsecured in nature, the company said in an exchange filing on Thursday.
The FCCBs will be convertible into approximately 82.30 crore equity shares of a face value of Rs 10 each, with a conversion price fixed at Rs 51 per share, which includes a premium of Rs 41. The allotment of these FCCB is expected to take place within 30 days from the closing date of the issue. The total issuance will include up to 500 FCCBs, each valued at $1,000,000, for a total of $500,000,000.
The unlisted FCCBs will have a tenor of 10 years and 1 day from the date they are fully paid up, offering a low interest rate of 5 per cent per annum.
Earlier, on September 24, 2024, the company’s boards also gave a nod to fund raising of Rs 1,524.60 crore through a preferential issue of up to 46.20 crores of shares, priced at Rs 33 each. Reliance Infrastructure Limited, the promoter of the company, aims to increase its equity stake by over Rs 600 crore. Other notable investors participating in this preferential issue include Authum Investment and Infrastructure Limited and Sanatan Financial Advisory Services Private Limited.
The funds raised through this issue will be used for business expansion, investments in subsidiaries and joint ventures, debt reduction and general corporate purposes, the company had previously announced.
In its latest financial report for the quarter ended June 30, 2024 (Q1FY25), Reliance Power narrowed its consolidated net loss to Rs 97.85 crore, a significant improvement from the loss of Rs 296.3 crore recorded in the same quarter of last year. This reduction in losses was attributed to higher revenues and reduced expenses, with total revenues increasing 6 per cent to Rs 2,069.1 crore, largely on the back of an uptick in other income.
Currently, Reliance Power shares are trading at a price-to-earnings (P/E) ratio of 316.18, with earnings per share (EPS) of Rs 0.17. Shares of the company saw a 52-week range, with the highest price at Rs 54.25 and the lowest at Rs 15.53.
Established as Reliance Energy Generation Limited, Reliance Power is a key player in the Reliance Anil Dhirubhai Ambani Group, which focuses on the development, construction, operation and maintenance of power projects in India and internationally.
First publication: October 4, 2024 | 12:22 p.m. STI
