Facebook-Jio deal: Brokerages turn bullish on RIL shares, see 25% upside, check new target prices

As Mark Zuckerberg owned Facebook agreed to buy a 9.99 per cent equity stake in Mukesh Ambani-led Reliance Jio for Rs 43,574 crore, Reliance Industries (RIL) share price surged over 10 per cent from Tuesday’s close. RIL shares hit day’s high of Rs 1377.55 apiece on BSE, gaining more than one per cent. So far, in April, oil-to-telecom company RIL has gained nearly 22 per cent, from Rs 1,080 per equity share at the start of the month. Market analysts see this mega Facebook-Jio deal as a win-win situation for both Reliance Jio and Facebook. “It’s a win-win situation for both the partners, as on one hand, it gives Facebook a wider audience with Jio’s 388 million client, while on the other hand, it helps Reliance pay its debt as well as leverage the reach of Whatsapp, Facebook Chat’s service,” Aamar Deo Singh, Head Advisory, Angel Broking Ltd, said.

RIL share price slips 19% in 4 months

Reliance Industries (RIL) share price is still 19 per cent off from its 52-week high of Rs 1,617.80, touched in December 2019. Another analyst, Deepak Jasani, Head of Research, HDFC Securities said that this deal is a positive for Reliance Industries. “The combination of WhatsApp expertise and user base, Reliance Jio’s vast subscriber base and Facebook’s deeply entrenched user base and technology is theoretically a win-win for all,” Jasani added. Post this deal, most of the brokerages turned bullish on RIL stock, with an upside of more than 25 per cent.

This deal to create consumer stickiness for Reliance Jio

Facebook and Reliance have also agreed to let Reliance Retail use WhatsApp as part of its new commerce business. “Jio Platforms, Reliance Retail and WhatsApp have also entered into a commercial partnership agreement to accelerate its new commerce business on the JioMart platform,” Sharekahn said in its latest research report. The research and brokerage firm maintained its ‘buy’ rating to the stock with a target price of Rs 1,710, an upside of 25.5 per cent.

The Facebook and Reliance Jio deal came at a time when there are delays on fibre InvIT and Aramco deals. “Rising digital content consumption, affordable data prices and content availability on two strong platforms could lead to huge leverage through consumer insights,” Emkay Global Financial Services said in its report. For a 12 months investment horizon, the research and brokerage firm has given a target price of Rs 1,500, an upside of 10 per cent to RIL stock. “In our view, Jio has always been looking for household wallet share by offering more services on the table and this partnership would help in creating consumer stickiness over the medium term,” the report added.

RJio-Facebook deal opens up plethora of growth opportunities

Reliance Jio’s partnership with Facebook could open up a plethora of growth opportunities for its digital services – Jio Platforms and fiber initiatives, Motilal Oswal said in a recent research report. With 17 per cent upside, the research and brokerage firm has recommended to ‘buy’ the share, suggesting a target price of Rs 1,589 per share. “The size of the deal justifies the higher magnitude of valuation RJio has garnered in just 3.5 years since its launch,” the report said. This valuation is over 20% higher than the current enterprise value of Bharti Airtel.

The stake sale is the first step in the steady unlocking of value across businesses, with the Saudi Aramco Deal for Oil to Chem (OTC) business also a key monitorable over next 12 months, Centrum Broking said. With a ‘buy’ rating to the stock, the brokerage house has given a target price of Rs 1,595, upside of 17 per cent.