New Delhi: Reliance Power and Reliance Infrastructure share prices are in a downward spiral after the latter company’s  board approved  Foreign Currency Convertible Bonds (FCCBs) worth of Rs 2,930 crore. Notably, the Reliance Power share price has rallied continuously in the preceding 15 sessions prior to that. In last one month it is up 68%. Stock market analysts also attributed the sudden fall to profit booking. While, Reliance Infrastructure share price is down 10% in last five days albeit it has rallied 40% in last 30 days.

Foreign Currency Convertible Bonds (FCCBs):

The unsecured bonds will be issued on a private placement basis at a low annual interest rate of 5% to affiliates of Varde Investment Partners. The time period will span for a decade. In equity terms, the FCCBs would be equivalent to 82.30 crore  shares valued at Rs 10 each. The conversion price is Rs 51 per share which means an impressive premium of Rs 41. The issuance of the bonds at lower interest rates might have put pressure on Reliance Power  share price.

ESOS:

Last week, the Reliance Power’s board also introduced the ‘Reliance Power Employee Stock Option Scheme 2024.’The policymakers had also said that this scheme  would be extended to the employees of other group companies also. According to its recent exchange filing with the Bombay Stock Exchange (BSE), the board would  not allow a single employ to hold more than 22 crore shares under the scheme. These developments may also impact Reliance Power  share price.

Is Reliance Power Share Price Overvalued?

According to the stock valuation platform Alpha Spread’ Reliance Power share price is currently overvalued by 60%. The Anil Amban owned company’s scrip’s intrinsic value is Rs 20 apiece. On Friday, the scrip closed 5% lower at Rs 50.97 apiece on the BSE. Whereas, stock valuation platform undervalues Reliance Infrastructure share price by 9%. The company is fairly valued at Rs 338 apiece. On Friday, the shares had dived 8% to close at Rs 301.55 on the bourse.