Alok Industries jumps 20% on RIL’s ₹3,300 cr investment via preferential shares

Shares of Alok Industries soared 20% to hit a 52-week high of ₹25.86 on the BSE after the company revealed its allotment of non-convertible redeemable preference shares worth ₹3,300 crore to Reliance Industries Limited (RIL).

At 4.30 pm, the stock was trading 20% higher at ₹25.86. In contrast to this, the broader BSE Sensex was trading 0.53% or 379.46 lower at ₹71,892.48. The market capitalisation of Alok Industries stood at ₹12,840.11 crore. In the past week, its shares rose over 17.81%, while it raised 28.04% in the past month. The stock soared 54.95% in the last six months, 19.17% year-to-date and 63.29% over the past year respectively.

Alok Industries in an exchange filing today revealed that the company has issued preferential shares to Reliance Industries Limited (RIL) amounting to ₹3,300 crores with a 9% dividend rate.

RIL recently secured preferential shares with a 9% dividend rate through a private placement, strengthening its financial position. These preferential shares, redeemable at par, as per the filing.

“The company has today, at around 2.00 p.m., allotted to Reliance Industries Limited 3,300,00,00,000 9% non-convertible redeemable preference shares of ₹1/- each for cash at par aggregating ₹3,300,00,00,000/- (Rupees Three Thousand Three Hundred Crore Only), on the terms and conditions as approved by the shareholders of the company vide special resolution passed on December 23, 2023,” the filing states.

The market responded robustly to this development, with quantity traded around 2 crore. Its two-week average quantity stood at 32.16 lakh.

Notably, Reliance Industries is a key player in the textile manufacturing sector, having acquired Alok Industries in 2020 alongside JM Financial Asset Reconstruction co through bankruptcy proceedings.

On December 6, 2023, Alok Industries announced its engagement in facility agreements with the State Bank of India. The agreements encompass a term loan of ₹1,750 crore designated for repaying existing bank loans, constituting a pivotal component of the company's financial restructuring. Additionally, a working capital facility of ₹90 crore availed to address the company's operational requirements, as per the filing exchange.

“The aforesaid facilities to be availed by the company will be secured as follows: a. Term Loan: i) first ranking pari-passu charge over the moveable fixed assets (present and future) of the Company; and ii) first ranking pari-passu charge over the immovable properties of the Company and its subsidiary, viz., Alok Infrastructure Limited. b. Working Capital: i) first ranking pari-passu charge over the current assets (present and future) of the Company,” the filing states.

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