Stocks of Reliance Power and Reliance Infrastructure, which are major companies in the Reliance Group of Anil Ambani soared on Monday after a Delhi High Court order, sought to get Union Bank to clarify to the court on a previous notice on debt recovery actions. The growth alleviated fears of investors about the possibility of selling assets by the debt-stricken companies, and restored confidence in the markets.
Overall, stocks appeared favorable, and the industry experienced significant growth demonstrating an encouraging trend.
Highlights of Stock Performance.
Reliance Power stock has gained more than 8 percent to 38.50 in the BSE, the highest single-day percentage gain in weeks, and Reliance Infra has soared by 6.5 percent to 213 with high trading volumes. The rally undid recent losses that were caused by the bank October notice under SARFAESI Act, which aimed to recover 3500 crore on the subsidiaries of Reliance Infra. There was short-covering and new buying, which was reflected in intra-day peaks where Reliance Power hit ₹40.
Analysts explain the bounce by the interim relief mood of the court that told the Union Bank to clarify the scope of the notice in two weeks, preventing aggressive execution. This is in the wake of aggressive deleveraging by Ambani, with Reliance Power being in the recent past paying off debts owed to lenders such as Yes Bank through equity swaps.
Background of the Bank Notice
The notice of Union Bank was aimed at the telecom division of Reliance Infra, and other units against the loans that were not paid in the years of the 2010s boom. It claimed default on 10,000 crore+ exposure, which caused concern of auctioning of assets just like Jio stake that had been sold previously. Reliance Infra challenged the case in the court, which stated that settlements and One-Time Restructuring (OTR) were paid, which was in contravention to the RBI guidelines.
The HC bench, which was hearing the petition of Reliance, observed procedural lapses, and wanted the bank to respond by December 23. This is a reflection of past victories, such as Mumbai NCLT passing 3,200 crore resolution of Vidarbha industries under Reliance power.
Singapore Revival Implications to Ambani Group.
The order provides a judicial supervision on the behaviors of lenders, which contribute to the turnaround story of Ambani. Reliance Power targets 1 lakh crore worth of green energy projects including those in Bangladesh, and Infra drives defence and infra bids. Brokerages such as Motilal Oswal raised targets to 45 by stating debt reduction of 15, 000 crore to less than 5,000 crore.
Nevertheless, there are still risks associated with continuing Adani Power arbitration and SEBI investigations. The HC move is viewed by the investors as a breath, which may release the value in the 5,000 MW solar pipelines. The Ambani stocks performed well with BSE Sensex flat, and this got the attention of FII in the boom of capex in India.
Market and Expert Reactions
Analysts applaud it as positive interim step towards creditor haircuts to improve peer stocks such as Jaiprakash Power. The camp of Ambani is optimistic in terms of Q3 earnings. However, a complete recovery depends on court finality and new investment. This episode highlights the changing bankruptcy situation in India where negotiations are favored to a liquidation.
