Reliance Infra Share Price Falls 4.99% to Rs. 157.05 on CBI and MCA Investigation Concerns

Overview:

• Reliance Infra share price declined 4.99% to Rs. 157.05 on the day and is now at the lowest point it has been in this 52-week period. 

• Regulatory inquiries related to the ADAG Group, CBI charge sheets, and scrutiny from the MCA continue to impact investor sentiment. 

• Ongoing weak profitability, high debt levels, and declining institutional ownership characterise the most recent challenges, despite seemingly attractive valuations. 

Reliance Infra share price (RInfra) dropped 4.99% to Rs. 157.05, hitting a low of Rs. 157.02 during the session, which is as low as it has traded in these 52 weeks. It had become evident that investor jitters are rising on news of Anil Ambani-led ADAG Group investigations, deteriorating financial results, and concerns over debt-heavy balance sheet of the company. Let’s explore a Reliance Infra share price analysis based on Moneycontrol data. 

Current Performance

Reliance Infra stock opened at Rs. 167, slightly above the previous close of Rs. 165.29, but sharp selling quickly pushed it into the lower circuit zone. With a market cap of Rs. 6,221 crore, today’s drop highlights a broader trend of erosion in shareholder wealth. The stock has fallen nearly 38% over the past year, significantly underperforming the Sensex, which gained almost 8% in the same period.

Reliance Infra share price chart shows a dip of 5% on Moneycontrol:

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Regulatory Pressure Intensifies Market Concerns

Reliance Infra shares’ latest slump comes on the heels of major legal developments. The Central Bureau of Investigation (CBI) has filed a chargesheet naming Anil Ambani, ADAG companies, and former Yes Bank CEO Rana Kapoor in connection with an alleged loan fraud. The CBI alleges that Yes Bank suffered a loss of Rs. 2,796.77 crore due to loans linked to Reliance Commercial Finance and Reliance Home Finance.

At the same time, the Ministry of Corporate Affairs (MCA) has launched a probe into alleged fund diversion within the ADAG Group. The Enforcement Directorate (ED) is also examining earlier allegations involving shell entities and potential manipulation of financial records. These parallel investigations have amplified concerns about governance, raising doubts about long-term credibility across the group’s companies.

Though Reliance Infra stock maintains that these issues do not affect its current business operations and that Anil Ambani no longer holds executive control, investors remain cautious. The legal overhang has become a major driver behind the stock’s persistent decline.

Weak Financials and High Debt Add to Pressure

Beyond regulatory troubles, the company’s fundamentals also reflect significant challenges. Reliance Infrastructure reported a 47% drop in Profit Before Tax (excluding other income) and a steep 61% fall in Profit After Tax in its latest quarter compared with the four-quarter average. These figures signal contracting profitability in the near term.

The company’s Debt-to-EBITDA ratio stands at 7.32x, underscoring the strain of a heavy debt burden relative to earnings. Its Return on Capital Employed (ROCE) averages just 4.58%, far below industry expectations. Institutional investors appear to recognise the risks. The collective holdings have dropped by 3.29% in the last quarter, indicating reduced confidence among large financial players.

Attractive Valuations but High Risk

Valuation metrics paint a contrasting picture. Reliance Infra stock trades at a TTM PE of just 2.03 and a P/B ratio of 0.50, far lower than the sector’s average PE of 27.40. While these numbers suggest the stock is undervalued, the market seems to be pricing in the company’s debt load, governance concerns, and uncertain growth outlook. With the stock hovering near its all-time low despite historically high peak, its all-time high was Rs. 2,641. The gap between past potential and current performance remains striking.

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Investor Outlook

Reliance Infra share price’s steep fall reflects a combination of regulatory scrutiny, weakening financial indicators, and declining investor trust. Unless the company resolves legal issues, improves profitability, and reduces debt pressure, the stock may continue to face downward momentum despite its low valuations.

FAQs

1. Why is Reliance Infra share price falling?

Reliance Infra shares’ sharp decline is mainly due to mounting regulatory investigations involving the ADAG Group, including CBI and MCA probes. These legal developments have significantly dented investor sentiment. Combined with weak quarterly financial performance, high debt levels, and reduced institutional participation, the stock faces heavy downward pressure despite low valuations.

2. How have the company’s financial results impacted the stock?

The company’s latest quarterly results show a 47% drop in PBT (excluding other income) and a 61% decline in PAT compared to its four-quarter average. Such sharp reductions in profitability raise concerns about operational efficiency and future earnings stability. These weak numbers make investors cautious, contributing to sustained selling and negative stock momentum.

3. Is Reliance Infrastructure traded at a discount at these price levels? 

Despite some valuation metrics (TTM PE of 2.03 and P/B of 0.50) implying the stock is cheap, low valuations generally mean high risk. In this situation, the market appears to be pricing in a discount because of perceived governance issues, the possibility of future liabilities born out of investigations, marginal profitability and a high debt burden. Being undervalued does not denote recovery.

4. Is high debt a risk for Reliance Infra stock’s outlook? 

Reliance Infra stock has significant leverage relative to earnings ith a Debt-to-EBITDA of 7.32x. Rated that highly for debt invites financial risk if profits decline. The company must use a significant amount of cash flow for interest costs, thereby limiting potential for growth. The risk of leverage represents a longer-term concern for shareholders. 

5. Will Reliance Infrastructure recover from its 52-week low? 

The potential to recover is there but recovery will depend on several factors. First, resolving regulatory matters, second, growing profitability, third, reducing debt and fourth, restoring the confidence of investors. If the company can demonstrate evidence of strong earnings being at least stable and resolve governance issues, sentiment will positively shift slowly. Until evidence of stability, share price will remain volatile and weak.