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RIL share price hits 52-week high on stake acquisition in REC Solar, Sterling & Wilson

Reliance New Energy Solar Ltd (RNESL), a wholly-owned subsidiary of Reliance Industries Ltd (RIL), has announced acquisition of 100 percent shareholding of REC Solar Holdings AS

October 11, 2021 / 04:52 PM IST
 
 
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Reliance Industries (RIL) share price touched a 52-week high of Rs 2,724.70 adding 2 percent in the early trade on October 11 after the company acquired a controlling stake in the REC Solar Holdings.

"Reliance New Energy Solar (RNESL), a wholly-owned subsidiary of Reliance Industries (RIL), has announced acquisition of 100 percent shareholding of REC Solar Holdings AS (REC Group) from China National Bluestar (Group), for an Enterprise Value of USD 771 million," Reliance Industries said in a BSE filing.

In a separate announcement, Reliance New Energy Solar said it will acquire 40 percent of Sterling and Wilson Solar (SWSL) in a deal underscoring the company's clean-energy ambitions.






RNESL will buy a stake in Sterling and Wilson Solar, a leading solar engineering, procurement and constructions solutions provider, through a combination of primary investment, secondary purchase and open offer, RIL said in a statement.


The acquisition of REC will help Reliance with a ready global platform and the opportunity to expand and grow in key green energy markets globally, including in the US, Europe, Australia and elsewhere in Asia, it added.


REC is headquartered in Norway and has its operational headquarters in Singapore and regional hubs in North America, Europe, Australia, and Asia-Pacific REC has over 600 utility and design patents, of which 446 are granted and balance are under evaluation.







Also Read - Reliance New Energy Solar acquires REC Solar: 8 key things to know

Reliance will strongly support for REC’s planned expansions including 2-3 GW Cells and Module capacity in Singapore, brand new 2 GW Cells and Module unit in France and another 1 GW Modules plant in the US.

In India, Reliance plans to use this industry leading technology in their fully integrated, metallic Silicon to PV Panel manufacturing giga factory at Dhirubhai Ambani Green Energy Giga Complex, Jamnagar initially starting with 4 GW per annum capacity and eventually growing to 10 GW per annum.

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“It is in line with our strategy of investing in new and advanced technologies and operating capabilities aimed at achieving Reliance’s goal of enabling 100 GW clean and green energy before the end of this decade," said Mukesh Ambani, Chairman of Reliance Industries.

Experts remained bullish on Reliance Industries and asked to hold the stock in a portfolio especially after several deals in the green energy space.

"The acquisitions are in line with Reliance's strategy to diversify into Green Energy. Unlike other acquisitions. REC Solar is also a low cost manufacturer of Solar grade Polysilicon and PV Cells. The acquisition of REC Solar Holdings will provide a global platform to Reliance and access to green energy markets," said Jay Prakash Gupta, Founder at Dhan.

He further said over the last 18 months, Reliance has been agile and has taken bold and swift decisions, and has become a dominant player in Retail and Technology businesses. "Its plan to enter Green Energy is a positive move."

Reliance is a kind of stock which one should buy and hold in a portfolio as an investor, Gupta advised.

Gaurav Garg, Head of Research at CapitalVia Global Research advised buying the stock on every dip near Rs 2,400 as that level will be an opportunity to accumulate stock for the levels of Rs 3,000 in FY22.

"Reliance Industries aims to be carbon free by 2035 and hence emerged out to be one of the major players in this space. RIL’s business is well diversified and future outlook looks good. Also, it will be interesting to watch the gross refining margins (GRMs) for its petrochemical business as crude has been rallying and is well settled above $75 a barrel, therefore GRM is expected to be better in Q1FY22," he said.

However, as the stock has already rallied around 10 percent from Rs 2,500 level, Garg is expecting consolidation in the stock for next few months.

Catch all the market action on our live blog

Jefferies

Research house has maintained buy rating on Reliance Industries and raised the target price to Rs 3,050 from Rs 2,580 per share.

The company has acquired REC group, an integrated solar PV maker, for USD 771 million. REC is the only international company to commercialise tech that consumes 75% less power versus Chinese companies.

REC has patented tech & opens up export market for company’s solar business.

We has included company’s solar business valuation in our target and there’s possibility of 10-12% upgrade to consensus O2C EBITDA in FY22, said Jefferies.
Kotak Institutional Equities


Kotak Institutional Equities maintained its Add rating for the stock, but revised upward its estimate of fair value.  "RIL’s announced acquisitions and tie-ups in the new energy business put in place the initial building blocks of technology and expertise to set up the four proposed giga factories in the coming years. We retain ADD with a revised Fair Value of Rs2,800 noting near-term triggers from (1) recovery in refining cycle, (2) sustained momentum in subscriber additions post the imminent launch of JioPhone Next, (3) potential hike in telecom tariffs and (4) anticipated strong rebound in retail business."

RNESL-Sterling Deal

In the first leg of the deal, RNESL will acquire a 15.46 percent stake in Sterling & Wilson Solar at Rs 375 per share, or roughly Rs 1,100 crore.

Also Read - RIL Unit to buy 40% of Sterling and Wilson via preferential allotment, secondary purchase

In the second leg, Shapoorji Pallonji and Khurshed Daruvala, the promoters of Sterling and Wilson, will sell 1.84 crore shares (around 9.7 percent equity) to RNESL at the same price of Rs 375 per share.

This will require the Reliance unit to make an open offer to public shareholders for an additional 25.9 percent stake.

In case, the open offer fails to push RNESL’s total stake to 40 percent, Shapoorji Pallonji and Daruvala will sell more of their shares to make good the difference.

At 09:17 hrs Reliance Industries was quoting at Rs 2,700.00, up Rs 29.15, or 1.09 percent on the BSE.

Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Moneycontrol News
first published: Oct 11, 2021 09:33 am

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