Reliance Infrastructure secures board approval; shares surge

Shares of Reliance Infrastructure rose over 4% today in a sluggish market, offering a potential opportunity for those looking to invest in stocks. This surge followed the announcement that the board had approved a proposal to raise ₹2,930 crore through the issuance of unsecured foreign currency convertible bonds (FCCBs) to VFSI Holdings.

Market performance

Reliance Infrastructure's shares increased by 4.10%, reaching ₹345.80 compared to the previous close of ₹332.15 on the Bombay Stock Exchange (BSE). The company's market capitalisation now stands at ₹13,436.77 crore.

The shares have shown significant volatility over the past year, with a beta of 1.4. The stock's relative strength index (RSI) is presently at 75.7, suggesting it is trading in overbought territory.

The stock of Reliance Infrastructure is performing strongly, staying above the 5-day, 10-day, and other significant moving averages up to the 200-day. 

Details of the FCCB issuance

In a regulatory filing, the company disclosed that the FCCBs will be unsecured and carry an ultra-low interest rate of 5% per annum, with a long maturity of 10 years. This funding strategy aligns with the company's growth objectives.

"The Board of Directors of Reliance Infrastructure Limited has approved raising funds to $350 million (₹2,930 crore) for VFSI Holdings Pte Limited, an affiliate of Varde Investment Partners, LP, a leading global alternative investment firm," the filing stated.

Employee stock option scheme

Additionally, the board has also approved an employee stock Option Scheme (ESOS) for all employees. This initiative allows for a grant of up to 2.60 crore equity shares valued at over ₹850 crore, representing 5% of the fully diluted capital. The ESOS aims to enhance employee earnings potential, aligning it with the company's overall performance and growth.

Key takeaways

• Reliance Infrastructure shares gained over 4% amid weak market conditions.
• The board approved the issuance of ₹2,930 crore in FCCBs to VFSI Holdings.
• The FCCBs carry a low interest rate of 5% and mature in 10 years.
• The company's shares show high volatility and are currently in the overbought zone.
• An ESOS was approved to enhance employee earnings, aligning with company performance.

This development provides an opportunity for investors looking to invest in stocks with significant growth potential.