Reliance Power shares experienced a 5% drop in early trading on October 4, a day after the company announced a major funding initiative through Foreign Currency Convertible Bonds (FCCBs) worth Rs 4,200 crore. This downturn also reflects profit-booking activity, as the stock has surged by over 64% in the last month alone and gained an impressive 112% since the start of the year, vastly outperforming the Nifty 50 benchmark’s 30% rise.
On October 3, the Anil Ambani-led Reliance Power disclosed its board’s approval for the FCCB issuance on a private placement basis to affiliates of Värde Investment Partners. These FCCBs, with a tenure of 10 years, carry an ultra-low annual interest rate of 5%. They are unsecured and will be convertible into roughly 82.30 crore equity shares at a conversion price of Rs 51 per share, which includes a premium of Rs 41 over the face value. The conversion price is at a premium based on the calculated floor price, derived from the average weekly high and low of closing prices in the two weeks leading up to the relevant date.
The company board also greenlit an Employee Stock Option Scheme (ESOS) under SEBI’s 2021 regulations for employee benefits, pending approval from shareholders.
Strong Performance and Future Plans
The recent dip comes after a phenomenal run for Reliance Power, with its stock appreciating over 170% in the past year, fueled by interest from both institutional and retail investors. This performance aligns with the company’s recent allotment of 46.20 crore shares, worth Rs 1,524.60 crore, via preferential issue to Reliance Infrastructure Ltd and two non-promoter entities, including Authum Investment and Infrastructure Ltd, and Sanatan Financial Advisory Services.
Reliance Power plans to channel a significant portion of these funds, around Rs 803.60 crore, towards growing its renewable energy footprint and addressing long-term working capital needs. The company has been focused on expanding its presence in renewable energy, a key component of its growth strategy, with these funds set to boost this initiative further.
As investors await further updates, Reliance Power’s capital expansion plans appear aligned with the sector’s growing shift toward sustainable energy and new business opportunities.