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Last Updated : Aug 13, 2019 12:22 PM IST | Source: Moneycontrol.com

RIL surges 12%, posts biggest one-day gain in 10 years after AGM

Ambani assured shareholders that Reliance will reward them abundantly through higher dividends, periodic bonus issues and other means, and at a more accelerated pace than any time in company's history.

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Shares of Reliance Industries (RIL) surged 12 percent intraday on August 13—the biggest one-day gain in last 10 years—after Mukesh Ambani promised to make it zero net debt company in next 18 months by selling stake and asset monetisation.

The stock had fallen more than 21 percent in last three months on debt worries, as Credit Suisse raised concerns over company's $65 billion debt. It was trading at Rs 1,295, up Rs 133, or 11.45 percent on the BSE at 1116 hours IST.

"We have a very clear roadmap to becoming a zero net debt company within the next 18 months that is by March 31, 2021," Chairman and Managing Director, Mukesh Ambani said while addressing company's 42nd Annual General Meeting on August 12.

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The company ended last year with net debt of Rs 1,54,478 crore.

His roadmap to become zero debt company include deals with Saudi Aramco and BP, bringing strategic and financial investors in consumer businesses i.e. Jio and Reliance Retail, and unlocking options for real estate and financial investments.

Ambani assured shareholders that Reliance will reward them abundantly through higher dividends, periodic bonus issues and other means, and at a more accelerated pace than any time in company's history.

RIL will sell 20 percent stake in oil to chemicals business to Saudi Aramco with an enterprise value of $75 billion, which translated into consideration of $15 billion for the company.

Oil to chemicals division comprises the refining, petrochemicals and fuels marketing businesses of RIL.

The proposed investment would result in Saudi Aramco supplying 500 KBPD of crude oil to the Jamnagar refinery on a long term basis, Reliance said in its release.

On Jio, Ambani said investment cycle is now complete and only marginal investments are now required to grow capacity to meet growing demand after spending nearly Rs 3.5 lakh crore towards creating a state-of-the-art digital infrastructure across India, with the largest optical fiber footprint.

Last year, Reliance transferred its telecom infrastructure assets to two separate infrastructure trusts for a consideration of Rs 1.25 lakh crore with the intention of raising this money from large global institutional investors. It is confident that these transactions will be completed by the end of this financial year.

Through these investments, RIL has created world-class, legacy-free, future-proof assets all of which are fixed-mobile converged, Ambani said.

Reliance is now ready to kickstart four more engines of connectivity revenue for Jio—Internet of Things (IoT) all over India, home broadband, enterprise broadband, and broadband for small and medium businesses.

Brokerages upgraded their rating on the stock after strong commentary by Mukesh Ambani about Reliance roadmap for future.

Macquarie upgraded Reliance to outperform and also raised target price to Rs 1,370 from Rs 1,220, implying 19 percent potential upside following the stream of bullish newsflow at the AGM.

Company's target reflected Aramco's premium bid for refining & chemicals business and Aramco transaction will serve to allay concerns on growing net debt, said the brokerage which has not changed its cautious stance on company's free cash flow outlook.

Morgan Stanley also upgraded the stock to overweight from equal-weight with a target price at Rs 1,349 per share as faster asset monetisation could surprise.

"The roadmap towards zero net debt is a positive," said Nomura which has a buy call on the stock with a target price at Rs 1,600 per share.

Disclaimers: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Aug 13, 2019 12:22 pm
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