ADAG stocks: RPower, RInfra slump up to 31% in a month; analysts say 'avoid'

Shares of Reliance Power Ltd and Reliance Infrastructure Ltd continued to hit lower circuits on Tuesday, with both counters falling another 5 per cent each. With this, RPower's monthly decline widened to 30.59 per cent, while RInfra has dropped 24.44 per cent over the same period.

The ongoing sell-off began after the Enforcement Directorate (ED) carried out raids at nearly three dozen locations linked to the Reliance Anil Dhirubhai Ambani Group (ADAG) in Mumbai and New Delhi, as part of a money laundering investigation. Anil Ambani reportedly appeared before the central agency today for questioning in connection with the probe into alleged multiple bank loan fraud cases.

Earlier, Reliance ADAG had clarified that the ongoing investigation pertains to transactions involving YES Bank and Reliance Home Finance from over eight years ago. It also asserted that the loans in question have been fully repaid.

"Loans extended by Reliance Home Finance Limited (RHFL) to certain private companies of the promoter of YES Bank were sanctioned on merit, following due process, and were duly approved by a credit committee comprising more than 30 individuals. These loans were fully secured and have been fully repaid, including interest, with zero outstanding," the group stated.

The group also highlighted that RPower and RInfra are "nearly debt-free," with a net worth of Rs 16,431 crore and Rs 14,883 crore, respectively.

Responding to a joint query on RPower and RInfra shares, Arpit Beriwal, Manager – Derivatives Analyst (Equity Research) at Motilal Oswal Financial Services, said these two counters are highly volatile in nature. "It is better to avoid such counters, as entering at the wrong level can make it difficult to exit. Even if you are stuck in your positions, it is advisable to exit on bounces," he told Business Today.

Ravi Singh, Senior Vice-President of Retail Research at Religare Broking, echoed similar views, noting that both RPower and RInfra appear weak on the charts and investors with a short-term view should consider exiting on any rise.

Drumil Vithlani, Technical Research Analyst at Bonanza, advised short-term participants to stay away from both counters for now due to heightened volatility and frequent price locking in circuits.

On the level-specific front, Jigar S Patel, Senior Manager – Technical Research Analyst at Anand Rathi, noted that the next support level for RPower could be seen at Rs 42, while for RInfra, it would be around Rs 270.