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US Exim Bank Files Bankruptcy Case
The Export Import Bank of the United States (US Exim) has initiated bankruptcy proceedings against Reliance Power Ltd. in India. The bank's application cites an alleged default of $165.41 million by Reliance Power's subsidiary, Samalkot Power Ltd., with the parent company providing a guarantee. This filing under India's Insolvency and Bankruptcy Code (IBC) means the National Company Law Tribunal must now consider admitting the case if debt and default are proven.
Reliance Power Disputes Debt, Pursues Arbitration
Reliance Power has stated the bankruptcy application is not valid and vowed to contest it vigorously. The company's defense rests on the assertion that the debt itself is not due. This dispute is already being handled by the London Court of International Arbitration (LCIA). Samalkot Power Ltd. had filed its arbitration case against US Exim and Citibank N.A. on June 29, 2025. Reliance Power alerted investors to this ongoing arbitration in its filings with Indian stock exchanges in July 2025.
Stock Dips Amid Broader Group Worries
Shares of Reliance Power have fallen sharply, declining 27% over the past year and 16% year-to-date. The stock closed 1.9% lower on the NSE on Wednesday, before the company officially announced the bankruptcy filing. This stock performance is amplified by wider investigations into other Anil Ambani Group companies for alleged bank fraud and fund diversion by the Enforcement Directorate, a scrutiny that impacts the whole group's financial standing. Reliance Power's market capitalization stood at approximately ₹12,171.66 crore as of April 28, 2026.
Debt, Leverage, and Sector Concerns
Reliance Power's financial structure, particularly its debt and subsidiary guarantee, poses significant risks. The company has worked to reduce debt, settling large amounts and becoming debt-free standalone in June 2024. However, the current US Exim debt of $165.41 million indicates ongoing leverage issues. The company had settled Rs 3,872 crore related to Vidarbha Industries Power. Reliance Power's P/E ratio has been inconsistent, ranging from a negative -128.57 to over 42.4 or 56.8 (TTM) as of April 2026, due to volatile earnings. Its Return on Equity (ROE) has been reported as 0% or a negative -1.08%, indicating profitability issues. In the broader Indian power sector, while credit metrics are improving, companies with older thermal power plants or complex debt remain vulnerable. Around 80% of India's power sector debt still relies on bank loans, and achieving renewable energy targets depends on debt market financing. Competitors like Adani Power and Tata Power have larger market caps, suggesting different operational scales and stronger finances.
Outlook and Analyst View
Reliance Power's volatile earnings make traditional valuation metrics challenging. Analyst sentiment, based on technical indicators, is largely 'Sell', signaling caution. Some analyses suggest a 'Hold/Accumulate' stance while others warn of high risk due to stock volatility. The average analyst target price is around ₹37.00, suggesting potential upside from current levels. The company's strategic focus on developing and operating power projects continues, but overcoming these financial challenges will be key.