Reliance Infra shares hit 20% upper circuit. What’s next?

Reliance Infrastructure Ltd (RInfra) shares extended their winning streak for the third consecutive session on Wednesday, soaring 20% to hit the upper price limit of Rs 282.75. With this surge, the stock has gained 34.23% so far in 2024.
The sharp uptick in Reliance Infra’s share price followed the company’s announcement of a significant reduction in its standalone external debt, from Rs 3,831 crore to Rs 475 crore.
In a filing to the Bombay Stock Exchange (BSE), the company revealed that Invent Assets Securitisation and Reconstruction Pvt Ltd, a lender, had novated certain charged securities to recover its dues, reducing Invent ARC’s entire fund-based outstanding amount to zero.
Reliance Infra also stated that it had cleared funded outstanding dues to key lenders, including Life Insurance Corporation of India, Edelweiss Asset Reconstruction Company Ltd, ICICI Bank, and Union Bank, among others. As a result, the company’s external debt liability now stands at Rs 475 crore, boosting its net worth to Rs 9,041 crore.
On the technical front, Reliance Infra shares have been trading above key moving averages, including the 5-day, 10-day, and 200-day simple moving averages (SMAs). The stock’s 14-day relative strength index (RSI) is at 76.72, indicating that it is in overbought territory.
In terms of valuation, the stock has a negative price-to-equity (P/E) ratio of 5.89 and a price-to-book (P/B) value of 1.48. Earnings per share (EPS) stand at (-)40.04, with a return on equity of (-)25.15, as per BSE data.
Market experts have differing views on the stock’s future trajectory. Ravi Singh, Senior Vice-President of Retail Research at Religare Broking, sees potential for Reliance Infra to hit Rs 290 in the near term, recommending a strict stop loss at Rs 270.
Jigar S Patel, Senior Manager and Technical Research Analyst at Anand Rathi told Business Today that there is support at Rs 265 and resistance at Rs 308, noting that a decisive close above Rs 308 could lead to an upside of Rs 320, with an expected trading range of Rs 255 to Rs 320 in the short term.
Meanwhile, AR Ramachandran, a Sebi-registered research analyst, cautioned that while the stock appears bullish, it is also overbought. He identified the next resistance at Rs 331, advising investors to book profits as a daily close below Rs 247 could lead to a downward target of Rs 195.
Reliance Infra is involved in various sectors, including EPC services, power distribution in Delhi, and the operation of projects in defence and infrastructure, such as metro systems, toll roads, and airports.
The company was also responsible for the execution of the Mumbai Metro Line One project. As of June 2024, promoters held a 16.50% stake in the company.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)