Why is Everyone on Dalal Street Talking About Reliance Power?

2025 has been a rough ride for some stocks, and Reliance Power is the latest name to stir concern on Dalal Street.

Just days after Indian Energy Exchange (IEX) made headlines with a 29% drop in five sessions, shares of Reliance Power have taken a hit of their own.

Led by Anil Ambani company is once again in the spotlight, this time for a sharp market sell-off.

The shares of Reliance Power slumped 5% today, continuing a downward trend that has spooked investors.

The company's stock has plunged by 28% over the past month.

So what's going on with Reliance Power?

Before we explore the reasons behind the fall, here's a quick look at the company's core business.

About Reliance Power

Reliance Power Ltd, along with its subsidiaries, is involved in power generation across a mix of energy sources - coal, gas, hydro, wind, and solar.

Its portfolio also features some of India's Ultra Mega Power Projects (UMPPs), reinforcing its presence in the large-scale energy infrastructure space.

Beyond power generation, the company is actively engaged in setting up new energy projects and developing coal mines tied to these ventures.

Its ongoing developments include three coal-fired power plants backed by captive and external coal sources, one gas-based project, and 12 hydroelectric projects, spread across Arunachal Pradesh, Himachal Pradesh, and Uttarakhand.

Why Reliance Power Shares Are Falling

The steep fall comes amid a growing storm of allegations and regulatory action that have dragged the Anil Ambani-led company into the spotlight for all the wrong reasons.

#1 Involvement in a Fake Bank Guarantee Case

At the centre of the trouble is a fake bank guarantee worth Rs 682 million (m) submitted by Reliance Power and its affiliate, Maharashtra Energy Generation Ltd, for a solar power storage tender issued by the Solar Energy Corporation of India (SECI).

• The guarantee was arranged through a shell firm, Biswal Tradelink Pvt Ltd (BTPL), which impersonated SBI using a fake domain (s-bi.co.in).
• According to the Enforcement Directorate (ED), Reliance Power paid BTPL Rs 54 m for arranging the guarantee.
• ED investigations revealed forged SBI endorsements, fake confirmations, and fraudulent communication used in the tender.

#2 Blacklisting from SECI Projects

After the fake bank guarantee came to light, SECI took a strict stand on the matter.

It banned Reliance Power and its group firms from bidding on any of its projects for three years, starting November 2024.

This move is a major setback, as it bars the company from participating in future renewable energy tenders floated by one of India's biggest government-backed energy bodies.

#3 Ongoing ED Probe & Arrests

• On 1 August 2025, BTPL’s Managing Director, Partha Sarathi Biswal, was arrested by the ED.
• He is currently in ED custody, and the agency plans to confront him face-to-face with Anil Ambani during questioning on 5 August to uncover the full extent of the alleged fraud.
• ED believes this case is part of a larger money laundering operation involving fake guarantees and financial misrepresentation.

Reliance Power's Clarification

In response to recent media coverage surrounding enforcement actions, Reliance Power has issued a firm statement stating that these developments have no impact on its business operations, financial health, or any of its stakeholders.

The company said that the media reports appear to be linked to decade-old allegations involving other group entities - Reliance Communications (RCOM) and Reliance Home Finance (RHFL) - and not Reliance Power itself.

It highlighted the following points:

• No business or financial links: Reliance Power is a separate, independently listed entity with no ties to RCOM or RHFL.
• Historical context: RCOM has been under insolvency proceedings for over six years, while RHFL’s issues have already been fully resolved by the Supreme Court.
• No board involvement: Anil Ambani does not hold any board position in Reliance Power, so actions involving him or other firms have no bearing on its governance.
• Legal process ongoing: The matters raised are already under judicial review before the Securities Appellate Tribunal.

Quarterly Numbers

Reliance Power's Q1 FY26 results offered a mixed picture, while revenue from operations dipped 5.35% year-on-year (YoY) to Rs 18.9 billion (bn), the company delivered a sharp earnings rebound.

EBITDA for the quarter stood at Rs 5.7 bn, and net profit came in at Rs 446.8 m, a significant turnaround from a net loss of Rs 978.5 m in the same period last year. Even profit before tax swung into positive territory at Rs 723 m, compared to a loss of Rs 733.3 m a year ago.

On the financial health front, Reliance Power continued to pay down its debt. It serviced Rs 5.9 bn in debt during the quarter. As of June-end, the company's net worth stood at Rs 164.3 bn.

Operationally, its flagship 3,960 MW Sasan UMPP in Madhya Pradesh clocked a plant load factor of around 91%, while the Rosa Power Plant in Uttar Pradesh reported availability of 97%.

From a rock-bottom price Rs 1.2 in 2020 to Rs 61 in FY25, the stock had staged a remarkable rally. This was backed by a Rs 40 bn full-year profit. But did the one-year profit justify the 50x surge in the stock?

For a deeper insight into this, watch our Co-Head of Research at Equitymaster, Rahul Shah’s video - Reliance Power: 50x Surge. But What Next?

What Next?

Reliance Power is working on expanding its clean energy footprint. Its subsidiary, Reliance NU Energies, recently received a Letter of Award (LoA) from state-run SJVN Ltd for a 350 MW ISTS-connected Solar + Battery Energy Storage System (BESS) project.

The project includes setting up 600 MW of solar DC capacity and 175 MW / 700 MWh of BESS capacity, won through competitive bidding at a tariff of Rs 3.33/kWh.

In a significant step, the company's board, on 16 July, gave the green light to raise up to Rs 90 bn through a blend of equity and debt instruments.

As part of this plan, the company may issue up to Rs 30 bn worth of secured or unsecured, redeemable non-convertible debentures (NCDs). These could be rolled out in one or more tranches, either through private placements or other financing routes.

The company is leveraging its operational portfolio of around 5.3 GW and scaling up its renewable energy pipeline of 3.3 GWh.

Conclusion

With India's energy needs on the rise and a strong policy push for both reliable thermal power and cleaner alternatives, the company has room to grow.

Reliance Power could also eventually benefit from group-level developments - green hydrogen, solar manufacturing, or energy storage.

However, in the short term, the cloud of allegations surrounding the group at large is likely to weigh down the stock.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

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