Reliance Power stock surges for 11th consecutive session, hits 52-week high, amid debt prepayment

Reliance Power's stock surged 5 per cent today, reaching a 52-week high of Rs 44.15 on the BSE, marking its 10th consecutive day of gains. The stock’s stellar performance has been driven by the company's recent efforts to reduce its debt, including a significant prepayment made by its subsidiary, Rosa Power.

Rosa Power, a wholly-owned subsidiary of Reliance Power, prepaid Rs 850 crore of its outstanding debt to Singapore-based Varde Partners. This move marks an important step in the company's path toward becoming debt-free. As the sole lender to Rosa Power, Varde Partners' loan repayment bolstered investor confidence, driving Reliance Power's stock upward. The company is targeting full debt repayment by the end of the current financial year.

This debt prepayment isn’t the only catalyst for Reliance Power’s stock rally. The stock has consistently hit its upper circuit of 5 per cent for seven of the last 11 days, leading to an impressive 42 per cent overall gain in just 10 sessions. The company's efforts to bolster its financial position, coupled with a Rs 1,525 crore preferential issue, have added further fuel to its growth trajectory.

On Monday, Reliance Power's board approved the preferential issue, which includes a contribution of over Rs 600 crore from its promoter, Reliance Infrastructure, and an additional Rs 900 crore from Authum Investment and Infrastructure Ltd., along with Sanatan Financial Advisory Services. This capital infusion will raise the company's net worth to over Rs 12,680 crore from Rs 11,155 crore, further enhancing its zero-bank-debt status.

The company's strong balance sheet, bolstered by the debt reduction and preferential issue, will enable it to explore new growth opportunities, especially in the renewable energy sector. Rosa Power operates a 1,200 MW coal-based thermal power plant in Uttar Pradesh and, with improved financial flexibility, Reliance Power is expected to expand both its conventional and renewable energy ventures.