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RIL Partly Paid-Up Share Price More Than Doubles Over Intrinsic Value

Reliance Industries partly paid up shares touched an intraday high of Rs 1,109.80, which was also its highest level so far.

Jul 22, 2020 / 02:30 PM IST
 
 
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Reliance Industries partly paid up rights shares closed at Rs 1,105.55 on the BSE, which was more than double its intrinsic value (around Rs 493), and up 1.85 percent compared to its previous closing price, with a market capitalisation of Rs 46,702.88 crore.

The intrinsic value is one-fourth stock price of Reliance Industries (previous closing was Rs 1,971.85). Investors have so far paid only 25 percent (Rs 314.25) of rights issue price of Rs 1,257, hence Reliance price of around Rs 1,971.85 should be divided by 4.

The second instalment of Rs 314.25 will be due in May 2021 and last instalment of Rs 628.50 will be paid in November 2021. And immediately after that right shares will be merged with Reliance Industries full paid up shares.

It touched an intraday high of Rs 1,109.80, which was also its highest level so far.

Reliance Industries also touched a record high of Rs 2,010 today, up 1.9 percent over previous closing value, hitting a market capitalisation of over Rs 12.70 lakh crore which is the highest among all listed entities on exchanges.

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Also it is the biggest gainer among Nifty50 or BSE Sensex 30 stocks in last four months as it rallied 132 percent from its March 23's low, while rose 34 percent year-to-date.

The stock closed at Rs 2,004.10 on the BSE, up 1.64 percent.

Reliance Industries became a net debt free company well ahead of its target of March 2021 as it paid its debt of Rs 1.61 lakh crore through biggest ever rights issue of Rs 53,124 crore, stake sale in Jio Platforms and stake sale to BP in the petro-retail JV, which was overall one of triggers for rally in the stock price.

"As Reliance grows bigger, we have demonstrated our ability to raise necessary investments to fire our growth engines. Now, on the back of our robust balance sheet, and taking advantage of the favourable conditions in global debt markets, we shall confidently pursue all future growth opportunities across our businesses," Mukesh Ambani, Chairman had said while addressing shareholders during 43rd AGM last week.

Google, which was the latest investor in Jio Platforms, invested Rs 33,737 crore for a 7.73 percent stake as they will jointly develop entry level, affordable smartphone to accelerate the path to Iindia's digitization.

Jio Platforms received over Rs 1.5 lakh crore investment in three months, since April 22.

Religare Broking after RIL AGM had said with so much development on the Jio platform mainly on the digital side as well as marquee strategic partners as investors, it has the potential to become a truly global company, offering solutions to clients worldwide.

"Going forward, RIL plans to strengthen and grow retail and O2C business are also an encouraging sign. On the financial side, it has a health balance sheet, net debt-free status, strong management and promising growth prospects across businesses. We remain positive on the company’s long term growth plans and would advise investors to hold the stock for healthy returns. Fresh investment in RIL to be made only on dips," the brokerage added.

IDBI Capital infact upgraded its rating on the stock to buy from hold with a target of Rs 2,154 as it expects the company's EBITDA to grow -2.9 percent/+42.3 percent while PAT to grow by -17.3 percent/+65.6 percent in FY21/FY22, respectively.

"We are raising our EBITDA estimates upwards by 6 percent and 7 percent for FY21 and FY22 to factor in better refinery utilization during lockdown and higher expected ARPU," it said.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

"Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd which publishes Moneycontrol."
Moneycontrol News
first published: Jul 22, 2020 02:30 pm

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