What factors are fueling Reliance Power's 10-year high rally
The recent surge in Reliance Power's stock to a 10-year high (₹71–₹72) is driven by a convergence of financial, operational, and sector-specific catalysts. Here's a breakdown of the key factors:
⚙️ 1. Financial Turnaround and Debt Reduction
- Profitability Restoration: The company reported a consolidated net profit of ₹125–126 crore in Q4 FY25, reversing a year-ago loss of ₹397–398 crore. This was aided by cost rationalization and reduced expenses .
- Debt Improvement: Debt-to-equity ratio plummeted from 1.61:1 (FY24) to 0.88:1 (FY25), following ₹5,338 crore in debt servicing over 12 months. Subsidiary Sasan Power also repaid $150 million to lenders, boosting liquidity .
- Equity Infusion: Raised ₹348 crore via preferential allotments to promoter Reliance Infrastructure and Basera Home Finance in May 2025, strengthening the balance sheet .
🔋 2. Major Project Wins in Renewable Energy
Reliance Power secured high-value, long-term contracts through subsidiaries, aligning with India's clean energy push:
- SECI Solar-BESS Project: Asia's largest integrated solar (930 MW) and battery storage (465 MW/1,860 MWh) project under a 25-year PPA at ₹3.53/kWh. Investment: ₹10,000 crore .
- SJVN Solar-BESS Project: A 350 MW solar plant coupled with 175 MW/700 MWh battery storage, secured at ₹3.33/kWh for 25 years .
- Bhutan Partnership: Commercial term sheet signed with Bhutan’s Druk Holding for solar project development .
These projects expand Reliance Power’s clean energy pipeline to 2.4 GW solar capacity and 2.5 GWh BESS capacity .
📈 3. Sector Tailwinds and Policy Support
- Rising Power Demand: India’s National Electricity Plan targets 80 GW of new coal capacity by 2031–32 and 500 GW of non-fossil capacity by 2030, creating growth avenues for diversified players like Reliance Power .
- Electrification and EV Adoption: Increased per-capita electricity consumption and electric vehicle adoption are driving sustained demand .
⚖️ 4. Legal and Regulatory Relief
- The Delhi High Court granted interim relief against SECI’s 3-year debarment order, allowing participation in new tenders .
💹 5. Market Sentiment and Technical Momentum
- Retail Investor Interest: Retail shareholders hold ~48.6% stake, driving high trading volumes (266 million shares on June 10) .
- Technical Indicators: Stock trades above all key moving averages, with MACD supporting bullish trends. RSI at 77.1 signals overbought conditions but reflects strong momentum .
📊 Key Projects Driving Growth
Table: Major Projects Fueling Investor Confidence
| Project | Capacity | Counterparty | Tariff | Investment | Impact |
|---|---|---|---|---|---|
| SECI Solar-BESS | 930 MW Solar + 465 MW BESS | SECI | ₹3.53/kWh | ₹10,000 crore | Asia's largest integrated project |
| SJVN Solar-BESS | 350 MW Solar + 175 MW BESS | SJVN Ltd | ₹3.33/kWh | Not disclosed | Enhances renewable portfolio |
| Bhutan Solar | Details undisclosed | Druk Holding | Under negotiation | Not disclosed | Expands international footprint |
⚠️ Sustainability Concerns and Analyst Outlook
- Short-Term Caution: RSI levels suggest overbought conditions, with resistance near ₹75. Analysts like Rajesh Bhosale (Angel One) recommend buying on dips at ₹56–57 support .
- Long-Term Bullishness: Improved fundamentals, clean energy focus, and sector growth justify optimism. Technical targets project upside to ₹75–80 if momentum sustains .
💎 Conclusion
Reliance Power’s rally stems from transformative financial discipline, strategic renewable projects, and favorable sector dynamics. While technical indicators hint at consolidation, the company’s repositioning as a debt-light, diversified energy player suggests sustained growth potential. Investors should monitor execution of new projects and broader market trends for entry opportunities .