Reliance Power Share Price Slumps 31% Amid ED Probe

Reliance Power Share Price Slumps 31% Amid ED Probe: A Detailed Analysis (August 2025)

A major investigation by the Enforcement Directorate sends shockwaves through the market, impacting Reliance Power's stock performance.

Dramatic Fall: Reliance Power Shares Hit Lower Circuit

The Indian stock market witnessed significant turbulence in early August 2025, particularly impacting Anil Ambani-led Reliance Group companies. Shares of Reliance Power experienced a dramatic downturn, plummeting by over 31% within a month and hitting the lower circuit for multiple consecutive trading sessions. This sharp decline is directly linked to an ongoing, intensified probe by the Enforcement Directorate (ED) into an alleged ₹17,000 crore loan fraud case connected to the group.

On August 6, 2025, Reliance Power shares continued their downward trajectory, falling by 5% to hit the lower circuit at ₹43. This marked the fourth consecutive day of the stock being locked at its lower limit, reflecting severe investor apprehension and a broad sell-off triggered by the deepening regulatory scrutiny. The market's reaction underscores the gravity of the allegations and the potential implications for the company and its associated entities.

The Multi-Crore Loan Fraud Investigation

The Enforcement Directorate's investigation centers on alleged financial irregularities and money laundering activities associated with loans amounting to approximately ₹17,000 crore. This massive sum represents loans extended by nearly 20 public and private sector banks to various entities within the Reliance Group, which have reportedly turned into non-performing assets (NPAs).

The probe, initiated under the provisions of the Prevention of Money Laundering Act (PMLA), gained significant momentum with a series of raids conducted by the ED. These operations involved searches at over 35 locations across Mumbai, encompassing more than 50 companies and 25 individuals linked to the Reliance Group. The agency's primary objective is to ascertain the alleged diversion of these loan funds and other financial misconduct.

Key Entities and Outstanding Loans Under ED Scanner:

• Reliance Home Finance Ltd (RHFL): Over ₹5,901 crore
• Reliance Commercial Finance Ltd (RCFL): Over ₹8,226 crore
• Reliance Communications (RCom): Nearly ₹4,105 crore

The ED's scrutiny extends to understanding the actions taken by the lending banks after these group companies defaulted on repayments, specifically whether any criminal complaints or FIRs were lodged.

Anil Ambani Under Scrutiny

A significant development in the investigation was the summoning and questioning of Anil Ambani, Chairman of the Reliance Group. He was directed to appear before the ED headquarters in New Delhi on August 5, 2025, where he underwent extensive questioning for over nine hours. The agency is recording his statement under the PMLA as it delves into the alleged loan fraud.

While Reliance Power and Reliance Infrastructure have issued clarifications stating that Anil Ambani no longer holds a board position in these specific entities and that the investigation pertains to "decade-old transactions" of other group companies (RCom and RHFL), the market's perception remains heavily influenced by his association with the broader Reliance Group. The ED's probe aims to uncover potential illegal loan diversions, with a particular focus on around ₹3,000 crore in loans granted by Yes Bank to Ambani's group companies between 2017 and 2019.

The agency is also expected to question senior officials from the lending banks to scrutinize their credit assessment processes and subsequent actions. A Look Out Circular (LOC) has also been issued against Anil Ambani at the ED's request, further intensifying the pressure.

The Biswal Tradelink Connection and SECI Blacklisting

Adding another layer to the complex investigation is the arrest of Partha Sarathi Biswal, Managing Director of Odisha-based Biswal Tradelink Pvt Ltd (BTPL). Biswal was arrested for allegedly arranging a fake bank guarantee worth ₹68 crore for a Reliance Group company, specifically Reliance Nu Bess Ltd, which is a subsidiary of Reliance Power.

The ED's probe revealed that BTPL allegedly submitted a fake bank guarantee with forged SBI endorsements and fabricated confirmations for a tender floated by the Solar Energy Corporation of India Ltd (SECI). Reliance Power Ltd reportedly paid BTPL ₹5.40 crore for arranging this guarantee. Investigations uncovered multiple undisclosed bank accounts of BTPL with transactions disproportionate to its declared turnover, raising suspicions of money laundering. The ED suspects collusion between the parties, despite Reliance Nu Bess initially lodging a complaint against BTPL for cheating.

As a consequence of this alleged fraud, SECI has taken a stringent stance, blacklisting Reliance Power and its group firms from bidding on any of its projects for three years, starting November 2024. This is a significant setback, as it bars the company from participating in future renewable energy tenders from a major government-backed energy body.

Investor Jitters and Technical Indicators

The news of the ED probe and Anil Ambani's summons has severely impacted investor sentiment towards Reliance Power. The stock's continuous hitting of the lower circuit reflects a strong bearish trend. Technical indicators further reinforce this negative outlook:

• Relative Strength Index (RSI): Dropped to around 25.2, indicating the stock is in deeply oversold territory. However, analysts caution that there are no immediate signs of a reversal or bottoming out.
• Moving Averages: The stock is trading below all its key simple moving averages (5-day to 200-day), signaling deep-rooted bearishness across all timeframes.

Before this latest probe, Reliance Power had shown some recovery, with a 37.76% gain over the past 12 months and a 6.10% increase year-to-date. However, the current situation has overshadowed these gains, triggering significant selling pressure. Analysts advise caution, recommending against new entries and suggesting that existing investors consider exiting on any relief rallies, awaiting concrete updates or signs of resolution.

The heightened trading volume observed during the slump indicates increased investor interest, albeit driven by concerns surrounding the investigation and its broader implications for the Reliance Group.

Reliance Power's Position and Path Forward

In response to the media reports and regulatory actions, Reliance Power has issued statements clarifying that the ongoing developments have "no impact" on its business operations, financial health, or any of its stakeholders. The company asserts its status as a separate, independently listed entity with no direct business or financial ties to Reliance Communications (RCom) or Reliance Home Finance (RHFL), the entities more directly implicated in the "decade-old allegations."

Reliance Power highlighted that RCom has been under insolvency proceedings for over six years, and RHFL's issues have been resolved by the Supreme Court. Furthermore, Anil Ambani has not been on the board of Reliance Power for over three years (since March 2022). The company maintains that the matters raised are already under judicial review before the Securities Appellate Tribunal and that due process of law will follow.

Despite these clarifications, the cloud of allegations surrounding the broader Reliance Group is likely to continue weighing down the stock in the short term. Analysts suggest that while the company's fundamentals and strategic focus on growth sectors like renewable energy offer long-term potential, investors should exercise extreme caution and prioritize due diligence before making investment decisions. The resolution of the ED probe and the clarity it brings will be crucial for the stock's future trajectory.

Uncertainty Lingers for Reliance Power

The sharp decline in Reliance Power's share price in August 2025 underscores the significant impact of regulatory investigations on market sentiment. As the ED probe into the alleged ₹17,000 crore loan fraud continues, the stock remains highly volatile. Investors will be closely watching for further developments and the eventual outcome of the investigation to gauge the long-term implications for Reliance Power and the broader Anil Ambani group.