Reliance Infrastructure rose 4.56% to Rs 527 at 11:55 IST on BSE, extending yesterday's gains triggered by the company selling its Mumbai power business to Adani Transmission.
The company made the announcement during trading hours yesterday, 21 December 2017.Shares of Reliance Infrastructure (RInfra) settled 8.12% higher at Rs 504 yesterday, 21 December 2017. The stock has risen 13.05% in two trading sessions from its close of Rs 466.15 on 20 December 2017.
Meanwhile, the S&P BSE Sensex was up 169.13 points, or 0.50% to 33,925.41.
On the BSE, 7.72 lakh shares were traded in the counter so far, compared with average daily volumes of 3.44 lakh shares in the past two weeks. The stock had hit a high of Rs 544 and a low of Rs 516 so far during the day. The stock hit a 52-week high of Rs 630 on 12 May 2017. The stock hit a 52-week low of Rs 390.60 on 15 November 2017.
RInfra announced signing of definitive binding agreement with Adani Transmission (ATL) for 100% stake sale of its Mumbai power business, which includes integrated business of generation, transmission and distribution of power for Mumbai.
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Total deal value is at Rs 13251 crore. This comprises of business valued at Rs 12101 crore and regulatory assets approved so far of Rs 1150 crore. In addition, regulatory assets under approval estimated at Rs 5000 crore and net working capital on closing estimated at Rs 550 crore will flow directly to RInfra. Total consideration value is estimated at Rs 18800 crore.
RInfra said it will utilize the proceeds of this transformative transaction entirely to reduce its debt, becoming debt free and up to Rs 3000 crore cash surplus. This is the largest ever debt reducing exercise by any corporate.
This monetization is a major step in RInfra's deleveraging strategy for future growth. Reliance Infrastructure's Mumbai Power business (known as Reliance Energy) is India's largest private sector integrated power utility distributing power to nearly 3 million residential, industrial and commercial consumers in the suburbs of Mumbai, covering an area of 400 square kilometre. It caters to a peak demand of over 1,800 MW, with annual revenues of Rs 7500 crore with stable cash flows.
Going forward, RInfra will focus on upcoming opportunities in asset light engineering procurement construction (EPC) and defence businesses. The proposed transaction is subject to customary approvals.
On a consolidated basis, net profit of Reliance Infrastructure declined 4.69% to Rs 543.81 crore on 4.85% rise in net sales to Rs 7105.90 crore in Q2 September 2017 over Q2 September 2016.
RInfra is one of the largest infrastructure companies, developing projects through various special purpose vehicles (SPVs) in several high growth sectors such as power, roads and metro rail in the infrastructure space and the defence sector.
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