Reliance Infrastructure (R-Infra) shares have been on a remarkable rally, surging 12% to a 52-week high of Rs 320 on the BSE on Friday. The spurt in share price comes after the company’s board approved a preferential issue to raise Rs 3,014 crore through the issuance of up to 125.6 million equity shares at a price of Rs 240 per share.
The company has also announced a significant reduction in its standalone external debt, bringing the amount down from Rs 3,831 crore to Rs 475 crore. This debt reduction, along with the fundraising plans, has boosted investor confidence in the stock. R-Infra said the preferential issue will enhance the company’s net worth from Rs 9,041 crore to over Rs 12,000 crore. The company has near zero debt after the debt reduction measures.
Main Points
Reliance Infrastructure Fundraising Plans
The board of Reliance Infrastructure has approved the following fundraising plans:
- Issuance of up to 12.56 crore equity shares and/or warrants convertible into equity shares through preferential allotment at an issue price of Rs 240 per share.
- Seeking enabling authorization from shareholders to raise up to Rs 3,000 crore through a Qualified Institutional Placement (QIP).
The preferential issue proceeds will be utilized for the expansion of business operations directly and/or through investment in subsidiaries and joint ventures, including meeting long-term working capital requirements and for general corporate purposes.
Reliance Infrastructure’s Business Segments
Reliance Infrastructure is engaged in the following business segments:
- Engineering, procurement, and construction (EPC) services
- Power distribution in Delhi
- Implementation, operation and maintenance of several projects in the defence sector and infrastructural areas like Metro, Toll Roads and Airports through its special purpose vehicles.
- Execution of the Mumbai Metro line one project on a build, own, operate and transfer basis.
Reliance Infrastructure’s Debt Reduction
Reliance Infrastructure has made significant progress in reducing its debt liabilities:
- Standalone external debt reduced by almost 87.6% to Rs 475 crore, down from Rs 3,831 crore as of June.
- Invent Assets Securitisation and Reconstruction Private Limited, a lender to the company, has novated certain charged securities to recover its dues, reducing its entire fund-based outstanding amount to zero.
- Reliance Infra has cleared its funded outstanding dues to Life Insurance Corporation of India, Edelweiss Asset Reconstruction Company Limited, ICICI Bank, Union Bank, and other lenders.
Stock Performance
In the last four trading sessions, the market price of Reliance Infrastructure has zoomed 41% after the announcement of debt reduction. The stock is trading close to its 52-week high level of Rs 308, touched on April 4.The shares of Reliance Infrastructure have increased by 78% in the last one year while surging 24% in the last 6 months and 47% on a year-to-date basis.
Key Metrics
Some of the key metrics for Reliance Infrastructure are:
- PE Ratio: -7.20
- Price/Sales ratio: 0.49
- Price to Book ratio: 0.61
Disclaimer: The information given in this article is from investment experts and brokerage companies, they do not represent Local Haryana. Before taking any investment related decision, you must consult a certified expert.
