Reliance Infra shares hit 20% upper circuit level; here's what analysts say

Reliance Infrastructure Ltd shares continue to rise for the third straight session on Wednesday. The stock surged 20 per cent to hit its upper price band of Rs 282.75. At this price, it has gained 34.23 per cent during the calendar year 2024 so far.

Today's sharp upmove in the share price came after the company said it has reduced its standalone external debt from Rs 3,831 crore to Rs 475 crore. "Reliance Infra announced that Invent Assets Securitisation and Reconstruction Pvt Ltd, a lender to the company, has novated certain charged securities to recover its dues. As a result, Invent ARC's entire fund-based outstanding amount has been reduced to Zero," the firm stated in a BSE filing.

"Additionally, Reliance Infra has cleared its funded outstanding dues to Life Insurance Corporation of India, Edelweiss Asset Reconstruction Company Ltd, ICICI Bank, Union Bank, and other lenders. The company's external debt liability is down to Rs 475 crore. Consequently, the net worth of the Company will stand at Rs 9,041 crore," it added.

On technical setup, the scrip traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The stock's 14-day relative strength index (RSI) came at 76.72. A level below 30 is defined as oversold while a value above 70 is considered overbought.

As per BSE, the company's stock has a negative price-to-equity (P/E) ratio of 5.89 against a price-to-book (P/B) value of 1.48. Earnings per share (EPS) stood at (-)40.04 with a return on equity of (-)25.15.

"The stock has potential to hit an upside target of Rs 290 in the near term. Keep a strict stop loss placed at Rs 270 for this trade," said Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking.

"Support will be at Rs 265 and resistance at Rs 308. A decisive close above Rs 308 level may trigger a further upside towards Rs 320. The expected trading range will be between Rs 255 and Rs 320 for the short term," said Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi.

"The stock price is bullish but also overbought on daily charts with next resistance at Rs 331. Investors are advised to keep booking profits as a daily close below support of Rs 247 could lead to a downward target of Rs 195 in the near term," said Sebi-registered research analyst AR Ramachandran.

RInfra is engaged in the business of providing EPC services, power distribution in Delhi and also in the implementation, operation and maintenance of several projects in defence sector and infrastructural areas such as metro, toll roads and airports. It has also executed the Mumbai Metro Line One project. As of June 2024, promoters held a 16.50 per cent stake in the company.