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Anil Ambani Group company stocks, which remained lacklustre for many months, have suddenly turned the darling of investors, with the Group making a series of announcements over the last two weeks. Reliance Infrastructure jumped to a new 52-week high five times and hit the upper circuit six times in the last seven trading sessions. The stock gained 5 per cent to ₹87 on Monday and doubled from ₹42 logged in April-end.
Other Anil Dhirubhai Ambani Group stocks — Reliance Capital, Reliance Naval, Reliance Power, Reliance Communication and Reliance Home — have jumped 100-168 per cent.
The Group company stocks have hogged the limelight ever since Reliance Infrastructure announced that it will raise ₹550 crore through the issue of 8.88 crore shares at ₹62 apiece on a preferential basis from promoter entity Risee Infinity and VFSI Investment, an affiliate of Varde Investment Partners LP. It also plans to raise funds through foreign currency convertible bonds of up to 24 per cent of the diluted equity whenever the FCCB is issued.
RInfra promoters will invest about ₹400 crore of this investment, and Varde about ₹150 crore. Following this, the promoters will hold 23 per cent in the company, Varde 7 per cent, and the public 70 per cent.
Another group company, Reliance Power, will reduce its debt by ₹1,325 crore by issuing 59.5 crore equity shares and 73 crore convertible warrants to its parent Reliance Infrastructure and other promoters.
Gaurav Garg, Head of Research, CapitalVia Global Research, said Anil Ambani is increasing his promoter stake in Reliance Infra and RPower while SBI has withdrawn the ‘fraud’ tag on some ADAG companies, which has helped in boosting the share prices.
However, cautioning investors, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said there is froth in the market This can be attributed to the ‘irrational exuberance’ of retail investors, particularly the millennials trading on low-cost tech platforms. “That is why some bankrupt companies and some potential bankruptcy candidates are going up. Retail traders playing this game are likely to come to grief,” he added.
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