Reliance Industries has fixed May 14 as the record date for the purpose of determining the eligible equity shareholders to receive the rights entitlement in the biggest ever rights issue to enter the Indian equity markets.
Reliance Industries has fixed May 14 as the record date for the purpose of determining the eligible equity shareholders to receive the rights entitlement in the biggest ever rights issue to enter the Indian equity markets. The Rs 53,125 crore issue that Mukesh Ambani’s RIL has planned will help India’s most valuable company cut its net debt to the targeted zero, along with various deals that the oil-to-telecom conglomerate has been bagging in the recent weeks. Experts however suggest investors to meticulously think about the investment goals before investing in the stock now. After the initial hour of trade on Monday, RIL share price was hovering just below the Rs 1,600 per share mark.
“Someone who wants the rights to invest in the stock at Rs 1,257 then he has to buy there is no other option. But as a long term investor, these prices are high. Above Rs 1,500 is more than the fair value of the stock,” Vinod Nair, Head of Research, Geojit Financial Services told Financial Express Online. RIL’s rights issue will be in the ratio of 1:15, translating to one equity share issued for every 15 shares held. Promoters will subscribe to the full portion of their quota, and also to the unsubscribed portion of the offer.
“Market and analysts are optimistic because they are valuing it (RIL) by the deals that they have signed and they are using the SOTP valuation method. But after the deal, the outlook is not that solid,” Nair said while adding that the oil and retail segment outlook is weak in the future post-covid but Jio is expected to perform well.
However, the deals that Mukesh Ambani has been able to sign in the recent weeks cannot be ignored. “Reliance Jio Platforms has succeeded in bringing in marquee global investors into India buoying the private equity play even in tough times. This will also reinforce the move towards Reliance becoming a zero net debt company soon,” said Deepak Jasani, Head of Retail Research, HDFC Securities on Friday.
With the almost Rs 60,000 crore worth deals RIL has bagged, the cash flow situation improves significantly at the company, something that is pivotal during the current times. “Clearly the point is the slew of deals they have done. Rerating of the stock that is happening and has happened over the time as well. People though core business will suffer and eventually the company will suffer but post the deals they have enough cash flows. They also have other deals on the table so they will have cash during the current times. How the situation is right now, the companies with surplus liquidity will be preferred,” Abhimanyu Sofat Head of Research, IIFL Securities told Financial Express Online.