Why are Religare Enterprises shares gaining for 6 sessions?

Shares of Religare Enterprises rallied over 10% in opening trade on Thursday as investors cheered announcements relating to the revival plan of Religare Finvest Limited (RFL). The company informed the exchanges that lenders to RFL have agreed to consider a one-time settlement (OTS) offer proposed by its debt-ridden subsidiary.

Religare Enterprises shares have been gaining for the last six sessions and risen more than 14% during this period amid a slew of positive developments. On Tuesday, Religare Enterprises and Religare Finvest settled a case related to alleged financial mismanagement and diversion of funds after collectively paying ₹10.5 crore towards settlement fees, with markets regulator SEBI.

Extending its gaining streak, Religare Enterprises share price opened 4% higher at ₹127.4 apiece against the previous closing price of ₹122.5 on the BSE. In the first hour of trade so far, the stock gained as much as 10.24% to hit a high of ₹135.05. The financial services stock traded 38% higher than its 52-week low of ₹97.65 touched on May 12, 2022, while it was down 30% from its 52-week high of ₹194.50 on September 24, 2021.

The market capitalisation of the smallcap stock rose to ₹4,253.12 crore as 1.53 lakh shares worth ₹2.03 crore changed hands over the counter as compared to the two-week average volume of 0.68 lakh scrips.

In comparision, the BSE benchmark Sensex opened flat with a positive bias and traded marginally higher by 12 points at 55,393 levels at the time of reporting.

Religare Enterprises (REL) in an exchange filing on Wednesday said that the lenders to RFL have in-principally agreed to consider the one-time settlement (OTS) proposal of its cash-strapped subsidiary. “RFL which has been a victim of siphoning off of funds by its erstwhile promoters has initiated and pursued legal actions for recovery and now begun its path towards revival. Post RFL's OTS completion, it will have healthy prudential ratios well above those prescribed by RBI,” REL said in a BSE filing.

Speaking on this development, Rashmi Saluja, Executive Chairperson of REL, said, "The RFL OTS is a win-win solution for the lenders and RFL, especially for its revival and expansion. With the completion of OTS, all the legacy issues will be behind us and the Religare group will stride forward to focus on future growth and becoming a 360° financial services provider."

As per the release, REL’s new management and independent board have focused on providing growth, stability and good governance to all its businesses. “Religare's Health Insurance, Housing Finance and Braking subsidiaries are already on a trajectory of growth, harnessing their full potential with increasing market share and profitability,” it added.

The release further stated that Religare has resolved many legacy issues left over by its erstwhile promoters including settlement with SEBI and becoming debt-free.

The company claimed that REL is going to enter new strategic businesses including insurance braking, digital wealth management, asset reconstruction and alternate investment funds and embark on a new era of growth in the financial year 2022-23 (FY23).