Explained: Why Reliance Power shares hit 5% upper circuit today

Reliance Power shares soared to a fresh 52-week high on Wednesday, hitting their 5% upper circuit for the sixth consecutive session. The stock reached Rs 42.06 on the Bombay Stock Exchange (BSE), continuing its impressive rally that has captured significant investor attention.
This surge follows key announcements made by the company, signalling strong growth prospects.
The latest catalyst for this upward momentum came during Reliance Power’s board meeting on Monday, where the company approved a major fundraising initiative.
The board cleared the issuance of up to 46.2 crore equity shares and/or convertible warrants, valued at Rs 1,525 crore through a preferential allotment.
The shares will be issued at Rs 33 per share, and the funds raised are expected to support the company’s plans to expand its business operations, either directly or through investments in its subsidiaries and joint ventures.
Additionally, a portion of the proceeds will be used to reduce the company’s debt, bolstering its financial position.
The company’s promoter, Reliance Infrastructure Limited, will be a key participant in this allotment, investing over Rs 600 crore to increase its equity stake. Other investors participating in the preferential issue include Authum Investment and Infrastructure Limited and Sanatan Financial Advisory Services.
The stock’s recent rise can also be attributed to Reliance Power’s announcement last week of settling guarantees worth Rs 3,872.04 crore related to Vidarbha Industries Power Ltd. (VIPL).
Furthermore, the company has resolved all disputes with CFM Asset Reconstruction, with 100% of VIPL’s shares pledged to CFM in exchange for the release of Reliance Power’s guarantees.
Year-to-date, Reliance Power shares have surged 73%, while delivering an exceptional 120% return over the past year, solidifying its status as a multi-bagger stock and one of the standout performers in the market.
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