Reliance Power, a prominent player within the Reliance Anil Dhirubhai Ambani Group (Reliance ADAG), has seen a remarkable surge in its share price following the presentation of Budget 2024. On July 23, 2024, the stock closed at ₹26.94 per share on the NSE.
Since then, it has consistently hit new 52-week highs, culminating in a nearly 30% appreciation in just eight trading sessions. By early August, the share price had risen to ₹34.54, reflecting growing investor confidence in the company’s future prospects.
The stock market’s bullish sentiment toward Reliance Power can be attributed to several key developments. Notably, the company has successfully become debt-free on a standalone basis, a significant milestone that has been well-received by investors and market analysts alike. The company’s ability to repay ₹800 crore of debt has removed a major overhang on its balance sheet, positioning it more favorably within the competitive landscape of India’s private power sector.
According to market experts, the positive outlook for Reliance Power has been bolstered by the growth-oriented nature of Budget 2024, which places a strong emphasis on power and infrastructure development.
The market anticipates that the budget’s focus on these sectors will directly benefit companies like Reliance Power, whose financial health is expected to improve further in the coming fiscal year. This optimism is reflected in the buying interest that has driven the stock’s recent performance.
Avinash Gorakshkar, Head of Research at Profitmart Securities, commented on the situation, stating,
Reliance Power is no longer a debt-hit company. The company has repaid its ₹800 crore debt and is now a debt-free company on a standalone basis. So, the company can now work on its order book, especially after the Budget 2024, which is a growth-oriented budget. So, the market expects the benefit to be reflected in the company’s order book in FY25. However, it would be interesting to see how much benefit trickles down into the financials and order book of Reliance Power.
While the elimination of debt has provided a solid foundation for the company’s future, challenges remain. One of the critical concerns is the state of the company’s order book.
Despite the positive sentiment surrounding the company’s financial turnaround, market experts are keenly aware that the true test will come in the form of new orders and contracts that Reliance Power can secure in the upcoming quarters. The company’s ability to capitalize on its improved financial position and convert it into tangible growth will be closely monitored by investors.
Sumeet Bagadia, Executive Director at Choice Broking, has weighed in on the stock’s future trajectory, advising investors to maintain a cautious but optimistic approach. He stated,
Reliance Power share price is on an uptrend. The stock has made a strong base at ₹32. Reliance Power shareholders are advised to hold the scrip with trailing stop loss at ₹32 for the short-term targets of ₹38 and ₹40 apiece. Fresh investors can also buy Reliance Power shares for the above-mentioned targets, maintaining a strict stop loss at ₹32. One can maintain a buy-on-dips strategy in this Anil Ambani-owned company until the stock price exceeds ₹32.
This guidance underscores the delicate balance between optimism and caution that currently characterizes investor sentiment toward Reliance Power. While the recent uptrend is encouraging, the company’s future performance will depend heavily on its ability to secure new business and navigate the competitive landscape of India’s power sector.
