Such financial engineering has positioned Reliance Infrastructure with a net worth of Rs 9,041 crore.
New Delhi: Mukesh Ambani’s younger brother Anil Ambani had been going through a rough patch of late, but the past two-three days have been very favourable, and lucrative for him as after the equity infusion, Reliance Infrastructure’s shares have surged by 50% in just one week.
This has caused a few eyebrows to be raised across the industry as it is being wondered what factors are driving this sudden rise, and can the momentum be sustained?
It was a significant trading day as the stock rose 12% after Reliance Infrastructure’s board approved raising Rs 3,014.4 crore through a preferential issue of up to 12.56 crore equity shares at Rs 240 apiece. This bullish move catapulted shares to a 52-week high of Rs 320, ultimately closing at Rs 316.45 with a market cap of Rs 12,622 crore. Analysts are now left speculating on the stock’s trajectory.
Jigar S Patel, a senior manager at Anand Rathi, indicates that the stock may face support at Rs 265, while resistance hovers around Rs 308. If it decisively breaks above this threshold, it could aim for Rs 320. Conversely, if it falls below Rs 279, there could be a sharp decline towards Rs 214.
Adding to the intrigue, Kushal Gandhi from StoxBox noted a staggering 65% increase over the last 13 trading sessions, citing a breakout from a rounding bottom pattern. However, with the Relative Strength Index (RSI) signalling an extreme overbought condition, caution is warranted.
Gandhi recommends a target price of Rs 350 while advising investors to prepare for potential profit-taking.
Notably, the proceeds from the preferential issue will be channelled towards expanding business operations and bolstering working capital. This strategic move comes on the heels of the company’s impressive feat of slashing standalone external debt from Rs 3,831 crore to a mere Rs 475 crore.
Such financial engineering has positioned Reliance Infrastructure with a net worth of Rs 9,041 crore, raising the question: Is this a sustainable recovery or merely a temporary blip?
Earlier, the flagship company of Anil Ambani Reliance Infrastructure Ltd was reported to receive Rs 1,100 crore equity infusion from the promoters and another Rs 1,910 crore from two Mumbai-based investment firms which was communicated via a filing by the company.
A fund raise plan was approved by the board of the company on Thursday, September 19.