Adani hits a six as RInfra becomes debt-free

The Gautam Adani led company Adani Transmission has played a masterstroke by buying the largest  private power utility company in the country, Reliance Energy from Reliance Infrastructure. Reliance Energy distributes power to nearly 3 million consumers in the suburbs of Mumbai.

By selling its power business Reliance Energy to Adani the debt-ladden Reliance Infrastructure (RInfra) gets a lease of life, but what is more interesting is Adani now owns a lucrative power business in the financial capital of the country. Given the Adani Group's ambition to expand, this deal will give Adani Transmission impetus to improve its market position and free way into the distribution business.

Post the deal, the cumulative transmission network of Adani Transmission will reach around 12000 ckt kms. Currently, the company's transmission network is 8500 ckt kms.

Earlier, Adani Group had lost nearly all its investment in the debt-ridden Mundra thermal power plant and it has restructured it power business after suffering major losses in this sector. The stock of Adani Transmission was trading at Rs. 235.90 per share, up Rs. 10.65, 4.73  per cent.

Meanwhile, RInfra will utilise the entire proceeds of  the deal to reduce its debt. The company's total income from operations stood at Rs. 7,734.91 crore in Q2FY18. The stock of  Rinfra was trading at Rs. 529.10 per share, up 4.98 per cent.