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There is positive news for Reliance Power investors. After suffering significant losses in the December quarter of the previous year, the company has made a strong recovery and achieved profitability in Q3 FY25.
Led by Anil Ambani, Reliance Power reported a net profit of ₹42 crore for the third quarter of fiscal year 2025, a strong turnaround from the ₹1,137 crore loss during the same period last year. Following this announcement, the company’s shares saw a notable rise of more than 10% on 6th February 2025. Source: Economic Times
Financial Performance Overview
Return to Profitability
The company’s return to profit is a major achievement, especially after the huge loss it suffered in the same quarter last year. This improvement shows that the management’s strategies and efforts are working. For the quarter ending December 2024, the company made a profit of ₹42 crore, compared to a ₹1,137 crore loss in the same period last year.
| Market Cap in Crore (as of 6-02-25) | CMP (as of 6-02-25) | High | Profit for Q3FY25 | ROCE % | Debt to Equity | 1 Yr Return % | |
| ₹17,044 | ₹42.4 | ₹54.2 | 42 Crore | 1.43 | 1.04 | 46 | |
Revenue and Expenses
Despite the positive bottom-line result, Reliance Power’s revenue from operations witnessed a slight decline of 4.6%, amounting to ₹1,852 crore in Q3FY25, compared to ₹1,943 crore in the same quarter last year. On a positive note, total expenses saw a significant reduction of 33%, decreasing from ₹3,167.49 crore to ₹2,109.56 crore. This expense reduction has been a key factor contributing to the company’s return to profitability. Source: Economic Times
Market Reaction
Investors responded positively to the earnings announcement. Reliance Power’s shares surged by approximately 10%, reflecting renewed investor confidence in the company’s financial health and future prospects.
Challenges and Auditor Observations
Despite the positive developments, auditors have pointed out material uncertainties concerning the financial position of one of Reliance Power’s subsidiaries, Rajasthan Sun Technique Energy Private Limited (RSTEPL). The subsidiary has defaulted on debt repayments and has been incurring continuous losses.
The management has stated that they are discussing with lenders to resolve the debt issues and are pursuing regulatory compensation related to foreign exchange rate variations and changes in direct normal irradiance (DNI).
Know More: SEBI Registered investment advisory | Stock investment advisory
Reliance Power’s Strategic Initiatives
Reliance Power has been actively working to reduce its debt burden. The company has achieved a debt reduction of ₹3,108 crore in the nine months leading up to December 31, 2024. This effort is part of a broader strategy to strengthen the balance sheet and improve financial stability.
Reliance Power is focusing on expanding its renewable energy portfolio in line with global energy trends. The company has secured a significant solar project, expected to contribute positively to future revenues and support the transition to sustainable energy sources.
Reliance Power Shares: Technical Indicators and Market Trends
Reliance Power’s Relative Strength Index (RSI) currently stands at 49.5. According to sources, an RSI below 30 indicates oversold conditions, while an RSI above 70 signals an overbought market. Since the stock’s RSI is near the mid-range, it suggests a neutral momentum.
The Moving Average Convergence Divergence (MACD) is at -0.9, below its center line. This indicates a bearish trend, signaling potential downside risks unless momentum shifts positively. Source: Economic Times
Moving Averages and Market Position
The stock is trading below its 30-day, 50-day, and 100-day Simple Moving Averages (SMAs), indicating short-to-medium-term weakness. However, it trades above its 5-day, 10-day, 20-day, and 150-day SMAs, suggesting short-term resilience.
These indicators suggest that while the stock has shown a short-term uptick, it still faces technical resistance in the long run. Investors will be closely watching for further signals before making their next move.
Reliance Power’s Journey: From Struggles to a Strong Comeback
Given the positive developments surrounding Reliance Power, let’s look at the company’s background. Reliance Power has experienced a dynamic journey marked by both challenges and resilience. It started strong in India’s power sector with major thermal, hydro, and renewable energy projects.
However, since 2011, the company has faced financial troubles due to project delays, cost overruns, and issues securing fuel for its thermal plants. These problems led to high debt, affecting its finances. By 2018, the company had reported big losses and had struggled with operational challenges.
Despite this, Reliance Power focused on restructuring, cutting costs, and improving efficiency. It sold some non-essential assets to reduce debt and worked on improving the performance of its existing projects.
Conclusion
Reliance Power’s return to profitability in Q3FY25 and the positive market response mark a significant milestone in the company’s turnaround journey. While challenges remain concerning subsidiary financial health, the company’s strategic initiatives in debt reduction and renewable energy expansion signal positive development. Investors and stakeholders will keenly observe how these strategies unfold in the coming quarters.
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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQs
What factors led to Reliance Power’s profitability in Q3FY25?
Several factors likely contributed to this improvement, including enhanced operational efficiency and reduced finance costs resulting from debt restructuring.
How did the stock market respond to the news?
The market reacted positively, with Reliance Power’s stock price soaring by 10% following the announcement of the profitable quarter. This indicates increased investor confidence in the company’s financial health and prospects.
What does this profitability signify for Reliance Power?
Returning to profitability is a significant milestone. It demonstrates improved financial stability and the ability to generate positive earnings, which can enhance the company’s creditworthiness and attract further investment.
Is Reliance Power stock a good investment now?
While the positive results are encouraging, investment decisions should be made after careful consideration and consultation with a financial advisor. Past performance does not indicate future results; several factors can influence future stock prices.
What are the crucial aspects to monitor going forward?
Investors should keep an eye on factors such as debt levels, power demand and supply dynamics, regulatory changes in the power sector, fuel prices, and the company’s ability to maintain operational efficiency and profitability in the long term.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
