REC shares jump 8% on D-Street—shares jump 8% on D-Street—here's what is keeping the investors keen

REC Limited, a leading Indian power sector company and a Mini Ratna (Category-I) Public Sector Undertaking (PSU) under the Ministry of Power, witnessed a significant surge in its stock price on June 3, 2023. The shares experienced a notable increase of approximately eight percent in the Indian stock market, or D-Street, as it is commonly referred to. This upward trend came in response to a crucial decision made by the company's board of directors.

The primary reason behind this positive development was the approval granted by the REC Limited board to enhance the borrowing limit in foreign currency from USD 20 billion to USD 24 billion. This decision signifies a substantial increase in the company's borrowing capacity in foreign currency, which is expected to provide REC with greater financial flexibility and improved access to international capital markets.

The enhanced borrowing limit will enable REC to raise funds more efficiently to meet its financial requirements and support its business growth objectives. This strategic move comes at an opportune time as the company continues to expand its operations and invest in various power sector projects both domestically and internationally.

The approval from the board follows a positive trend in the power sector and the Indian economy as a whole. The Indian government has been focusing on revitalizing the power sector and attracting foreign investment to boost its growth. The approval of this borrowing limit increase for REC reflects the confidence of the government and regulatory bodies in the company's financial stability and growth potential.

Investors have taken note of this development and have responded positively by increasing their holdings in REC shares, leading to the significant price surge on June 3. This upward trend is expected to continue as investors remain optimistic about the company's future prospects and its ability to capitalize on the increased borrowing capacity to generate higher returns.

In summary, the approval of a USD 4 billion increase in REC Limited's borrowing limit in foreign currency by its board has led to a substantial eight percent surge in its stock price on June 3, 2023. This strategic move provides the company with greater financial flexibility and improved access to international capital markets, enabling it to meet its financial requirements and support its business growth objectives. The positive investor sentiment towards this development is expected to continue as the power sector and Indian economy continue to show signs of growth and improvement.