Reliance Power share price: Anil Ambani-owned ADAG stock jumps 20% in one month. Buy, sell or hold?
Reliance Power share price: Despite volatility in the Indian stock market on Donald Trump’s tariff tension, Anil Dhirubhai Ambani Group (ADAG) stock Reliance Power share price ascended around 20% in one month. This Anil Ambani-owned ADAG stock has generated alpha returns against the frontline indices — Nifty 50, BSE Sensex, and Nifty Bank Index by delivering such a robust return in one month. In one month, the Nifty 50 index rose around 1.60%, the BSE Sensex surged 1.52%, and the Bank nifty index went up 6.13%. In the broad market, the Small-cap index has given a 3.81% return in one month, whereas the Mid-cap index surged 2.31% in one month. So, after hitting an all-time low of Re 1 apiece in March 2020, Reliance Power’s share price has ascended to ₹40 apiece. However, the energy stock still needs to cover a vast lost ground as it once traded at ₹375 apiece. So, those with Reliance Power stocks in their portfolio would be keen to know whether they should hold the stock for more returns of book profit re-enter at lower levels.
According to stock market experts, Reliance Power had trouble due to heavy borrowing and ambitious expansion plans. The company took on massive debt to build power plants, but delays, poor governance, regulatory issues, and coal supply problems hurt its financial health. However, the company has recently taken steps to reduce its debt. Its debt-equity ratio has improved after the sale of Reliance Capital to IndusInd International Holdings (IIHL). In the September 2024 quarter, Reliance Power reported a net profit of ₹2,878 crore, which was driven mainly by the exceptional income of ₹3,000 crore from the deconsolidation of its subsidiary company, Vidarbha Industries Power Limited (VIPL). They advised Reliance Power shareholders to hold the stock for the short-term target of ₹48 and 52. They also advised fresh investors to initiate momentum buying in Reliance Power shares for the above-mentioned targets, maintaining a stop loss at ₹36 apiece.
Why is Reliance Power share price rising?
Highlighting the reasons for Reliance Power’s share price rally, Nitin Kotiyal, Senior Research Analyst at Fynocrat Technologies, said, “Recently, Reliance Power has taken steps to reduce its debt. With the sale of Reliance Capital to IndusInd International Holdings (IIHL), its debt-to-equity ratio has improved from 1.61 to 0.86. However, despite claims that the company is now debt-free, it still holds ₹250 crore in Non-Convertible Debentures (NCDs) per the recent financials for Q3FY25. While the company has zero bank debt, it is still not net debt-free.”
Additionally, it has plans to issue Foreign Currency Convertible Bonds (FCCBs), which would further add to its debt in the future. The company has also improved its Debt Service Coverage Ratio and Interest Coverage Ratio from earlier levels, indicating a better ability to meet its debt and interest obligations.
“On the financial front, in the September quarter, the company reported a net profit of ₹2,878 crore, but this was mainly due to an exceptional income of ₹3,000 crore from the deconsolidation of Vidarbha Industries Power Limited (VIPL), a subsidiary of Reliance power. In the December quarter, it posted a net profit of ₹42 crore, largely due to other income of ₹307 crore. This means the company has yet to achieve profitability from its core operations,” said Nitin Kotiyal.
Operationally, its thermal power plants are performing well, making them some of the top-performing thermal plants in India. The company also focuses on clean energy and forming strategic joint ventures to expand its business. As part of this, its subsidiary has won a major solar and battery storage project, which will be one of the largest in Asia.
Pointing towards Reliance Power’s CAPEX expansion plans, Nitin Kotiyal said, “Reliance Power plans to invest in green energy projects in Andhra Pradesh, strengthening its push towards renewable energy.”
Reliance Power share price target
Expecting more upside in Reliance Power share price, Mahesh M Ojha, AVP — Research at Hensex Securities, said, “Reliance Power share price has made a strong base at ₹36 per share levels. On the upside, it is facing a hurdle at ₹44. On breaking above this hurdle on a closing basis, Reliance Power’s share price may soon touch ₹48 and ₹52 per share levels.”
Mahesh M Ojha suggested to the fresh investors, “Investors with high-risk appetite may initiate momentum buying in Reliance Power shares, maintaining stop loss at ₹36 for the short-term targets of ₹48 and ₹52.”
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts, consider individual risk tolerance, and conduct thorough research before making investment decisions, as market conditions can change rapidly, and individual circumstances may vary.
