Reliance Power's stocks up 21% in 4-days: What's fueling rally?
Anil Ambani-owned Reliance Power, has witnessed a significant 21.5% increase in its share value over the past four trading sessions, to touch ₹36.14 today. The surge was triggered by reports of potential acquisition talks between Adani Power and Vidarbha Industries Power, a subsidiary of Reliance Power. The discussions center around the purchase of Reliance's 600 MW Butibori Thermal Plant.
Acquisition details and potential benefits
The acquisition deal is estimated to be worth between ₹2,400 crore and ₹3,000 crore. This translates to approximately ₹4-5 crore per MW. An official said to HT Mint that Adani Power is negotiating with CFM Asset Reconstruction Co, to acquire the project under Vidarbha Industries Power Ltd. The plant's valuation was previously around ₹6,000 crore but has been revised due to halted power generation.
Adani's strategy and funding plan
The official further explained that the plant aligns with Adani's strategy. CFM ARC, which bought the project's loans for ₹1,265 crore, is currently its only creditor. The entire acquisition deal will be financed through internal accruals of the Adani Group. This strategic move by Adani Power, aims to capitalize on India's growing electricity demand as the country's leading private thermal power producer.
Reliance Power's stock performance
Over the past year, Reliance Power's shares have more than doubled with a gain of 121%. On a year-to-date basis, the stock has seen an impressive surge of 51%. In contrast, Adani Power's shares remained steady at ₹696.50 as of this morning on NSE. The potential acquisition deal has not only boosted investor confidence in Reliance Power, but also underscored Adani Power's strategic growth plans.
