This is a long tale. It includes short but bitter-sweet stories of two old mega-turned-penny-turned-normal stocks, and two new mega stocks. The four are part of leading Indian and foreign empires. Two of them belong to a giant-turned-puny industrialist. One is among the jewels in a most-respected group. The fourth is an already-risen foreign star, whose appliances are part of many urban households. Over the past few days, their fortunes have swung in direct and indirect ways. The stock of Reliance Power, which belongs to the Anil Ambani stable, lost 10 per cent in a single day. Reliance Infrastructure, the promoter of Reliance Power, remains either under the latter’s shadow, or dominates the skyline on some days. LG Electronics listed at a 50 per cent premium, something the Indian markets have not seen for a while. Tata Capital gained a single per cent on listing.
From a rock-bottom price of below Rs2 during the Covid peak, Reliance Power, which was quoted nearer to 300 before the 2008 Financial Crisis, rose to Rs70 in June this year. The spectacular almost 75 per cent jump in May-June this year, from below Rs40 to Rs70, was dictated by the dramatic change in the financials. Based on the audited results released on May 9, 2025, the loss of more than Rs2,000 crore in 2023-24 transformed into a profit before tax of more than Rs3,000 crore. This was despite a drop in revenue from operations, from Rs7,900 crore to Rs7,600 crore. Experts were ecstatic, and investors were euphoric. Slowly, people read the fine print, and realised that the profit was due to one-time “Exceptional Items,” which led to “Gain on deconsolidation of a subsidiary.” The stock is below Rs45, and lost 10 per cent after the company’s Chief Financial Officer was arrested by the Enforcement Directorate (ED).
In an uncanny manner, the exceptional item in the profit and loss account related to an insolvency. A subsidiary of Reliance Power, Vidarbha Industries Power, was declared bankrupt. Before this, the subsidiary’s lenders, who had a pledge over 100 per cent shares, took over the management. “Accordingly, a gain of Rs3,23,042 lakh (Rs3,230 crore) has been recognised as an exceptional item… for the year ended March 31, 2025,” stated a letter to the two stock exchanges. This seems like destiny for the owner, Anil Amabni, who declared personal and corporate bankruptcy in a foreign court in 2020. Before the inclusion of the subsidiary-related gain, the loss in 2024-25 was more than Rs180 crore which, to be fair, was a substantial reduction. The silver lining was that the company pared its debt. Court rulings favoured it. The insolvency court rejected lenders’ attempt to drag Reliance Power into insolvency.
Reliance Infrastructure’s stock, which was below Rs150 in January 1999, peaked at Rs2,500 in January 2008, plummeted to Rs11 during Covid, and zoomed to Rs375 in July 2025. Thereafter, it declined by Rs150. Like in the case of Reliance Power, the recent downward movements were due to red-corner notice issued against Anil Ambani, ED raids on group firms, fresh charges of manipulations filed by investigating agencies, arrest of senior management, and related events. The stock fortunes of the two related companies were tied via the Anil Ambani apron.
Both Tata Capital and LG launched mega IPOs (Initial Public Offerings) in the recent past. In the run-up to their openings, LG was a favourite, and Tata Capital faced several curve balls. The grey market premium before Tata’s IPO was more than Rs1,100, which suddenly dropped to just above Rs500. Around the same time, the company, which is promoted by Tata Sons, indicated a price band of just over Rs300. The management claimed that the low price was to encourage retail investors, who still stayed away. Only on the third day did the retail portion get subscribed, and it was the institutions that saved the day for the IPO. LG was oversubscribed by more than 50 times. On listing days, which were separate, Tata Capital showed a minor, almost non-existent uptick. LG listed at 50 per cent over the offer price, and closed 48 per cent higher.
The reasons for the dissimilarities are obvious. Tata Capital’s destiny was rocked by a series of infightings within the Tata Trusts, which control Tata Sons, the group’s holding company, and tensions between the entities. Home Minister Amit Shah and Finance Minister Nirmala Sitharaman intervened, which cooled down the emotions. There were issues with Tata Motors. The investors were apprehensive after the IPO was priced so benignly. They possibly felt that something was amiss, or else why would a company offer a huge discount, and forego possible gains, especially since the promoter, Tata Sons, offloaded half of the shares available. However, LG rode the negative news that tried to engulf its IPO. Some advisory firms advocated against the IPO due to LG’s liabilities of more than Rs4,700 crore, which were related to royalty payments, and disputed tax claims. The company has contested these, but not provided for them. The reported liabilities in 2024-25 were Rs5,500 crore.
