This loss-making stock of Anil Ambani's Reliance Group surged 300% in one year; here's why

Over the past year, Anil Ambani-led Reliance Group companies such as Reliance Infrastructure, Reliance Power and Reliance Capital have grabbed stock market investors’ attention leading to a rally in their share prices. The rise in share prices of these companies is attributed to heavy volume arising out of fund raising plans, asset monetisation, and reduction in debt at group entities.

One group company that has delivered strong returns to its shareholders in the last 12 months is Reliance Infrastructure. The company, involved in power generation, infrastructure, construction and defence, has surged more than 300% in one year despite reporting losses for all the four quarters. The share price has risen from 52-week low of ₹29.8 on February 19, 2021, to ₹120.8 intraday on February 15, 2021, registering a growth of 305% in one year.

Reliance Infrastructure shares have surged 80% in past six months and 17% in one month period. The stock has, however, fallen more than 14% over the last week when stock markets have been on a downtrend. On a long term basis, the stock delivered negative returns of 79% in 5 years and 80% in 10 years.

On Monday, shares of Reliance Infrastructure opened lower and hit a lower circuit of 10% at 120.8 on the BSE. There was a decline in volume trade as 0.79 lakh shares changed hands over the counter as compared to two-week average volume of 15.2 lakh shares. Marketcap of the smallcap stock stood at around ₹2,928.4 crore.

The stock traded higher than 20-day, 50-day, 100-day, and 200-day moving averages, but lower than 5-day average. Technically, the stock turned ‘bullish’ from ‘mildly bullish’ on February 2 at ₹110.80 apeice, as per stock research platform Markets Mojo.

The strong gain in Reliance Infrastructure shares was not in line with its financial performance. The infrastructure company reported a consolidated net loss of ₹106.91 crore for December quarter of the current fiscal, compared with a profit of ₹80.08 crore in the same period last year. Total income rose to ₹4,281.45 crore in Q3FY22, from ₹4,010.59 crore in Q3FY21.

For the second quarter ended September 30, 2021, the company posted consolidated net loss of ₹287.2 crore and a revenue of ₹5,760 crore, compared with loss of ₹277.4 crore and revenue of ₹5,257 crore in the previous corresponding period.

In the April-June quarter of the current fiscal, Reliance Infra registered a net loss of ₹95.15 crore compared to a consolidated net loss of ₹288.41 crore in the corresponding quarter of the previous fiscal. Its total consolidated income during the quarter rose to ₹4,623.17 crore as against ₹3,786.85 crore in the corresponding quarter a year.