Brokerage firm Bernstein expects a break-up of the company in the next 3-4 years through the IPO of the Jio and Retail business segments which should unlock additional shareholder value
Reliance Industries (RIL) share price hit a fresh all-time high of Rs 1,833.10 apiece on BSE after the oil-to-telecom conglomerate raised investment from 12th global investor for Jio Platforms. RIL has surpassed its previous high of Rs 1,804 apiece, touched last month. The stock has rallied 111 per cent since March 23, from Rs 868, taking the total market capitalisation of the company to a fresh high of Rs 11.6 lakh crore as of 10:26 AM. Besides, RIL’s telecom arm Reliance Jio opened JioMeet app for the general public, which can support up to 100 users in a session. The launch comes after increased usage of apps like Zoom, Google Meet, Microsoft Teams, among others, during the coronavirus-triggered lockdown. Last week, Intel Capital announced to invest Rs 1,894.50 crore for a 0.39 per cent equity stake in RIL’s digital-arm Jio Platforms. “RIL is now beginning to incubate a new financial services business. With the recent deleveraging exercise, involving a rights issue and the sale of a stake in the Jio Platform to multiple investors, RIL has created a kitty of $22.5bn, allowing it to become net debt-free by FY21 per RIL calculations, and FY22 per HSBC calculations,” HSBC said in a research report.
Since April this year, RIL has raised a total investment of Rs 1.17 lakh crore for an equity stake of 25.09 per cent in Jio Platforms. Reliance has made the firm net debt-free nine months ahead of its deadline, including the mega rights issue of Rs 53,124 crore. “We are positive on RIL from a long term perspective as we believe that the digital and retail business will be key growth drivers for the company going forward. The potential listing of the digital and retail business over the next 3-5 years would also lead to significant value unlocking for shareholders in the long run. We also expect the hydrocarbon business to recover in the second half of the year as demand for petro products normalizes,” said Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd.
Another brokerage firm Bernstein expects a break-up of the company in the next 3-4 years through the IPO of the Jio and Retail business segments which should unlock additional shareholder value. “Crude imports have dropped in Jamnagar by 25% in 1QFY20 which could presumably lead to lower refining runs. The upside to valuation could come from a sell-down of a 20% stake in refining and chemicals to Aramco next year for a value of US$15bn,” it added.
Research and brokerage firm Angel Broking has pegged a price of Rs 1,937 apiece, an upside of 8.4 per cent previous close. “RIL is India’s largest company with a dominant presence in refining, petrochemicals, telecom and retail businesses. Telecom business to witness robust growth over the next few years due to tariff hikes and shift of subscribers from Vodafone Idea to other telecom players,” it added recommending an ‘accumulate’ rating to the stock.