RInfra-Adani deal: Valuations remain crucial

It will decide debt reduction benefits for Reliance Infrastructure and gains for Adani unit

Reliance Infrastructure’s (RInfra’s) announcement that it has entered into an exclusivity period with Adani Transmission to discuss the proposed sale of its integrated business of generation, transmission and distribution of power for Mumbai, has enthused the Street.

The Adani Transmission stock rose 10 per cent to hit the upper circuit (no sellers) on Tuesday, looking at the benefits on cash flows and growth opportunities the Mumbai city distribution business brings in. The RInfra stock, however, gained a marginal 0.12 per cent.

Since the Mumbai power business is a key contributor to RInfra’s revenue and profitability, the Street’s reactions are understandable. The power