After witnessing an overwhelming response for the mega rights issue of Reliance Industries, the partly paid-up rights shares are set to debut on bourses on June 15.
Given the hefty fund raising in Jio Platforms from marquee global investors and tech companies such as Facebook, General Atlantic, Silver Lake, Vista Equity Partners and KKR, many experts feel listing price will be in the range of Rs 650-700.
"We are expecting a 5-7 percent premium for partly paid-up rights share. We remain constructive on Reliance Industries and recommend hold rating," Vineeta Sharma, Head of Research at Narnolia Financial Advisors told Moneycontrol.
Billionaire Mukesh Ambani-owned Reliance Industries' biggest ever Rs 53,124-crore rights issue was subscribed 1.59 times and received bids worth Rs 84,000 crore on June 3.
"Taking into considering the closing price of Rs 1,572 (June 10, 2020) and the present value of remaining two installments of rights shares, the listing price should be Rs 697 (1,572-875)," Manali Bhatia, Senior Research Analyst at Rudra Shares & Stock Brokers said.
According to Prashanth Tapse, AVP Research at Mehta Equities, Reliance partly paid-up rights shares could list in the range of Rs 600-650. "Listing price is equal to Rs 315 (the difference between current price of Rs 1,572 minus Right issue price Rs 1,257) plus first call partly payment of Rights Rs 314.25, i.e. Rs 629.25 approximately."
Reliance Industries Rights Entitlement had closed on May 29 with 7 percent premium over its intrinsic value. The intrinsic value is the difference between RIL share price and Rights issue price of Rs 1,257.
RIL share price has rallied 80 percent from its March lows largely driven by its telecom business.
Experts feel now all eyes will be on the Saudi Aramco deal, debt reduction plan and consumer business which would be the next key driver for its earnings.
"Reliance rights issue got overwhelming vote of confidence from all kinds of investors looking at its digital business growth prospects which is supported by marquee investors in Jio Platforms which clearly indicated that company is fully committed towards becoming a tech giant beyond imaginations," Prashanth Tapse, AVP Research at Mehta Equities said.
He feels next big thing to watch out for would be Saudi Aramco deal on or before aggressive deadline March 2021.
Mukesh Ambani in its AGM in 2019 said that the company will be net zero debt by March 2021. The company is on course to achieve its target ahead of the deadline.
"In spite of the COVID-19 crisis and the lockdowns, the due-diligence by Saudi Aramco for the planned investment in the O2C business is on track as both the parties are committed and actively engaged. With a strong visibility to these equity infusions, RIL is set to achieve net zero debt status ahead of its own aggressive timeline. We believe rights issue was a part of the company’s strategy of deleveraging its balance sheet," he said.
Reliance Industries raised Rs 97,885.65 crore by selling around 21 percent stake in Jio Platforms to marquee investors - Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala and ADIA.
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