Anil Dhirubhai Ambani Group (ADAG) stocks have been on an uptrend, outperforming the market this far in FY22. On Tuesday, all ADAG stocks scaled five percent and were locked in their upper circuit as compared to around a half a percent rise in benchmark indices.
This surge in ADAG stocks is mainly on the back of the companies aggressively tackling their debt obligation.
Reliance Power has surged 59 percent in June YTD, 78 percent in May, and a staggering 404 percent in the last year. Benchmark Nifty, on the other hand, has been up two percent in June, 6.5 percent in May, and around 58 percent in the last year.
Besides Reliance Power, other ADAG stocks such as Reliance Infrastructure, Reliance Communications, Reliance Capital, Reliance Home Finance, and Reliance Naval and Engineering have rallied in the range of 44 percent to 60 percent in June itself.
In the last one year, these stocks have rallied between 150 percent and 300 percent.
Reliance Infrastructure recently approved the subscription of preferential issue of up to 59.5 crore equity shares and up to 73 crore warrants convertible into an equivalent number of equity shares of Reliance Power by conversion of outstanding debt including interest aggregating up to Rs 1,325 crore.
The BSE filing added that the Preferential Issue by Reliance Power shall be made at an Issue Price of Rs.10 per share, as per SEBI (ICDR) Regulations. Shareholding of Reliance Infra and promoter group in Reliance Power will increase to 25 percent after the issue of equity shares and will further increase to over 38 percent post-conversion of warrants.
Reliance Infra has also been significantly reducing its debts in the past few years. Its board approved raising Rs 550 crore funds from promoters which will be utilised for long-term resources for general corporate purposes.
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Reliance Capital also announced that it plans to reduce the debt of over Rs 9,000 crore related to its 100 percent subsidiary Reliance Commercial Finance.
Regarding the recent CARE Ratings' downgrade, the company said, “..in a completely biased, unwarranted and unjustified rating action on September 20, 2019, CARE Ratings (CARE) had downgraded the Company’s entire outstanding debt to default “CARE D” rating, even though there was no overdue on principal or interest payment to any lender.”
The surge in other ADAG stocks can also be a result of the spillover of positive news in group companies, analysts noted.
(Edited by : Akanksha Upadhyay)