Reliance Infrastructure’s shares have surged by 50% in just one week, raising eyebrows across the financial landscape. What factors are driving this sudden rise, and can the momentum be sustained?
On a remarkable trading day, the stock rose 12% after the company’s board approved raising ₹3,014.4 crore through a preferential issue of up to 12.56 crore equity shares at ₹240 apiece. This bullish move catapulted shares to a 52-week high of ₹320, ultimately closing at ₹316.45 with a market cap of ₹12,622 crore. Analysts are now left speculating on the stock's trajectory.
Jigar S. Patel, a Senior Manager at Anand Rathi, indicates that the stock may face support at ₹265, while resistance hovers around ₹308. If it decisively breaks above this threshold, it could aim for ₹320. Conversely, if it falls below ₹279, there could be a sharp decline towards ₹214.
Adding to the intrigue, Kushal Gandhi from StoxBox noted a staggering 65% increase over the last 13 trading sessions, citing a breakout from a rounding bottom pattern. However, with the Relative Strength Index (RSI) signalling an extreme overbought condition, caution is warranted. Gandhi recommends a target price of ₹350 while advising investors to prepare for potential profit-taking.
Notably, the proceeds from the preferential issue will be channelled towards expanding business operations and bolstering working capital. This strategic move comes on the heels of the company’s impressive feat of slashing standalone external debt from ₹3,831 crore to a mere ₹475 crore. Such financial engineering has positioned Reliance Infrastructure with a net worth of ₹9,041 crore, raising the question: Is this a sustainable recovery or merely a temporary blip?
