Reliance Power Surges 20% in One Month: Should Investors Buy, Sell, or Hold?

Reliance Power, part of the Anil Dhirubhai Ambani Group (ADAG), has seen its share price jump nearly 20% in the past month, reaching around ₹42 as of April 16, 2025. This surge has outpaced broader market indices and brought renewed attention from investors evaluating the stock’s prospects

Key Reasons Behind the Rally

• Debt Resolution and Group Optimism: A major catalyst for the rally has been the successful acquisition of Reliance Capital by IndusInd International Holdings Ltd (IIHL) for ₹96.5 billion. This move concluded a protracted three-year debt resolution process, restoring financial stability and boosting sentiment across ADAG stocks, including Reliance Power2.

• Market Sentiment: The optimism following this group-level resolution has led to increased buying, even as the broader market paused after a strong run. Reliance Power’s stock defied the trend, posting gains while other sectors saw profit-booking

• Strong Returns: Over the past month, Reliance Power has returned 24.74%, and over the last year, it has delivered nearly 60% returns to investors, outperforming both the Sensex and Nifty

Financial Snapshot

Buy:
Investors with a high risk appetite may find Reliance Power attractive due to its turnaround potential, improved group-level financial stability, and recent strong momentum. The stock’s reasonable valuation ratios (P/E and P/B) and significant returns over the past year add to its appeal

Hold:
Those already holding the stock may consider maintaining their position, especially if they are optimistic about further group restructuring benefits and sector tailwinds. However, it is prudent to monitor quarterly earnings and any new developments closely.

Sell:
Short-term traders who have benefited from the recent rally might consider booking partial profits, particularly given the stock’s volatility and the fact that it remains below its 52-week high. Additionally, Reliance Power’s earnings remain modest, and the company has not paid dividends recently, which could limit upside if sentiment shifts

Risks and Considerations

• The company’s core earnings remain weak, with minimal profits and no dividend payouts.

• Reliance Power’s fortunes are closely tied to broader ADAG group developments and market sentiment, making it vulnerable to volatility.

• The power sector itself faces regulatory and operational challenges that could impact future growth.

Conclusion

Reliance Power’s 20% surge in one month is driven by improved group sentiment and a significant debt resolution event. While the stock offers turnaround potential and has delivered strong recent returns, it remains a speculative bet due to modest earnings and sector risks. Investors should weigh their risk tolerance and investment horizon before making a decision.

As Reliance Power looks to modernize and streamline its operations, technology partners such as Hexahome and Hexadecimal Software are expected to play a vital role in supporting its digital transformation and operational efficiency in the evolving energy landscape.