Reliance Power Emerges as Multibagger Stock, Rallies Over 2,400% in 4 Years

Shares of Reliance Power Ltd, the Anil Ambani-led power generation company, have turned into a multibagger investment over the past four years, surging an astonishing 2,400% from its March 2020 lows.

The company’s stock closed at Rs 28.68 on Monday, taking its four-year gains to 2,437% from the Rs 1.13 level it had plunged to on March 27, 2020. An investment of Rs 1 lakh in Reliance Power back then would now be worth over Rs 25.37 lakh.

The sharp up-move has been led by renewed investor interest and improving finances at the company over the past few years. Reliance Power shares rallied 10% on Tuesday alone to hit an intraday high of Rs 29.29. Over just the last year, the stock has surged over 80% from Rs 15.85 levels seen on June 12, 2023.

The recent leg higher has seen the stock gain 23% in just the past five trading sessions and over 40% in the last three months alone.

Reliance Power has been one of the top gainers this year, with its market capitalization swelling to over Rs 15,000 crore currently. The stock trades just 16% below its 52-week high of Rs 34.35 touched in February this year.

Analysts attribute the rally to cost optimization efforts, improving plant load factors, and debt resolution initiatives undertaken by the company over the past few years that have aided its turnaround.

However, they caution that valuations have turned richer after the big run-up, suggesting investors should weigh risks carefully before fresh exposure to the counter. Reliance Power still faces headwinds like its high debt burden and risks from unfavorable policies impacting its projects.

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