From Rags to Rally: What’s Powering the Rise of Anil Ambani’s Reliance Power and Reliance Infra?

Once symbols of a crumbling business empire, Anil Ambani’s Reliance Power and Reliance Infrastructure are now scripting a story of quiet resurgence. After years spent in the shadows of financial distress and fading relevance, the two companies are gradually finding their way back into market favour, fuelled by fresh developments and rising hopes of a long-awaited corporate revival.

In recent weeks, the rally in these stocks has been nothing short of remarkable. Reliance Power has surged by a whopping 70% over the past month alone, while Reliance Infrastructure has notched up an impressive gain of over 58% in the same period. The momentum becomes even more striking when viewed through a one-year lens as Reliance Power shares have soared more than 150%, and Reliance Infrastructure has climbed roughly 115%. The catalyst? A wave of optimism fuelled by positive legal, operational, and financial developments that fuelled hopes of the two companies charting a path back from the brink.

So, what’s fuelling this sudden bullishness?

For Reliance Infrastructure, one of the biggest confidence boosters came earlier this month when the National Company Law Appellate Tribunal (NCLAT) suspended insolvency proceedings initiated by IDBI Trusteeship Services, thereby, removing a significant overhang from its financial narrative.

But the legal reprieve wasn’t the only reason for celebration. Reliance Infrastructure also made headlines for bagging a milestone contract as it became the first private Indian firm to independently handle a full-scale aircraft upgrade programme. Valued at ₹5,000 crore and expected to stretch over the next 7 to 10 years, the deal marks a decisive entry into the high-stakes world of defence and aerospace, positioning the company as a serious player beyond its traditional domains.

In addition, the company is further scaling up its defence portfolio, having announced yesterday that arm Reliance Defence and German Diehl Defence were strengthening their strategic partnership to develop precision-guided munitions in India.

Meanwhile, Reliance Power’s turnaround story is being written largely through the growing orders of its subsidiaries. Its arm, Reliance NU Suntech, recently signed a 25-year power purchase agreement with SECI for Asia’s largest single-location solar and battery energy storage project. The project, boasting 930 MW of solar capacity and 465 MW/1,860 MWh of battery storage, is expected to attract investments to the tune of ₹10,000 crore.

Another subsidiary, Reliance NU Energies, also secured a 350 MW solar-BESS project from SJVN and inked a commercial term sheet with Bhutan’s Druk Holding and Investments to co-develop the country’s largest solar initiative, doubling down on the group’s renewable energy portfolio.

Adding to the market optimism is the improving financial performance of both companies. Reliance Infrastructure, in its Q4 earnings, reported a major win--zero standalone net debt to banks and other lenders. Over the course of FY24, it slashed its debt burden by a staggering ₹3,300 crore. The financial turnaround extended to the bottomline as well, with the company posting a consolidated net profit of ₹4,387 crore, a dramatic reversal from the ₹3,298 crore loss in the previous quarter.

Reliance Power followed a similar trajectory. It swung back into the black with a consolidated net profit of ₹126 crore, recovering from a year-ago consolidated net loss of ₹397.56 crore, yet another sign of stabilising finances.

Still, while green shoots of recovery are clearly emerging for these two Anil Ambani-led companies, the road ahead is far from certain. The rally has been swift, but questions remain over whether it is rooted in sustainable fundamentals or simply driven by euphoria and speculation.