Anil Ambani-led Reliance Group m-cap climbs 10 times to nearly Rs 10,000 crore; what's next?

The market value of Anil Ambani-led Reliance Group of companies has climbed nearly 1,000% following an impressive rally in Reliance Capital, Reliance Communications, Reliance Home Finance, Reliance Infrastructure and Reliance Power shares since the beginning of FY22.

The cumulative market value of the group companies stood at Rs 9,982.98 crore as of June 22, 2021 against Rs 940.23 crore as of March 31. Money9.com does not consider the market value of Reliance Naval as promoters held ‘Nil’ stake in the firm as of March 31.

The Reliance Capital scrip has climbed 113% to Rs 28.84 on June 22 from Rs 4.49 on March 31, 2021. Likewise, Reliance Communications, Reliance Home Finance, Reliance Infrastructure and Reliance Power have gained 182%, 36%, 265% and 342%, respectively, during the same period.

Shareholding pattern

Data available with BSE showed that promoters held a 1.51% stake in Reliance Capital as of March 31. However, their holdings stood at 4.98% in Reliance Infrastructure. Anil Ambani together with Jai Anshul Ambani, Jaianmol Ambani, Kokila D Ambani and Tina Ambani had a 0.08% stake in Reliance Power. However, total promoter holdings stood at 9.06% in the company. In the case of Reliance Communications, total promoter shareholding was at 5.18%. Data available with Ace Equity showed that there were over 60 lakh retail investors in the group as of March 31.

Latest updates

Going with market analyst, a couple of company-specific updates coupled with the ongoing rally in the broader market aided sentiment. For instance, Reliance Power has sought shareholders’ approval for a preferential issue of 59.5 crore equity shares and 73 crore warrants worth Rs 1,325 crore to its promoter firm Reliance Infrastructure, through postal ballot.

Likewise, Reliance Infrastructure earlier this month also sought shareholders’ approval to raise up to Rs 550.56 crore through issuance of shares on a preferential basis.

In another update, Reliance Home Finance (RHF) said it has appointed a panel for taking forward the resolution process of the debt-laden mortgage company. A group of lenders led by Bank of Baroda has under the Inter-Creditor Agreement (ICA) issued a letter of intent dated June 19, 2021 in favour of the Autumn Investment and Infrastructure Ltd as it has submitted the highest bid for taking over RHF.

Authum had submitted a bid of Rs 2,911 crore (which includes Rs 24 crore as deferred interest) to financial creditors subject to the terms and conditions of the bid document which has been approved by the lenders at their meeting held on June 19, 2021, RHF said in a BSE filing.

Expert view

Independent analyst Ambareesh Baliga suggested partial profit booking in Anil Ambani-led Reliance Group stocks. However, he added that some of the companies such as Reliance Power have shown earnings recovery.

“When the whole group is going through a difficult situation, I would be cautious. The market sentiment is extremely bullish, thus any positive sentiment in a sector or group naturally gets stretched. Thus investors who have been stuck in these stocks due to a bad decision in the last few years – should utilise this move to cut losses or book partial profits after this stupendous move,” Baliga said.