Reliance Industries shares tank 5% on calling-off $15 billion stake sale; here’s what brokerages say
Shares of Mukesh Ambani-led Reliance Industries Ltd (RIL) tanked 4.69 per cent to hit an intraday low of Rs 2,356.75 on BSE after the company said that it has decided with Saudi Aramco to re-evaluate the latter’s proposal to acquire a stake in the Indian conglomerate.
RIL said in a statement on Friday that it has withdrawn its application with the National Company Law Tribunal (NCLT) for segregating its oil-to-chemicals (O2C) business, after arriving at a mutual decision with Saudi Aramco to reassess the oil giant’s proposed around $15 billion investment in RIL’s O2C business.
The development came in view of Reliance’s new energy business plans and the “evolving nature of its business portfolio”, RIL said in a statement.
The stock opened 1 per cent lower at Rs 2,440 against the previous close of Rs 2,472.75 on BSE. With a market capitalisation of more than Rs 15,00,000 crore, the shares stand higher than 100 day and 200 day moving averages but lower than 5 day, 20 day and 50 day moving averages.
The large-cap stock has gained 25 per cent in the last one year and has risen 19 per cent since the beginning of this year.
“RIL and Saudi Aramco decided not to proceed with 20 per cent stake sale in RIL’s Oil to Chemical (O2C) hydrocarbon business. This is negative as it would have given RIL access to latest petrochemicals technologies along with assured crude supplies,” brokerage firm Prabhudas Lilladher said in a report.
However, it noted that RIL has made a strong move towards net-zero plan by 2035 and plan investment in solar energy, advanced energy storage, electrolyser and fuel cell. Accordingly, the brokerage house doesn’t rule out possibility of more broad-based partnership encompassing hydrocarbons and renewables in the future, given their long relationship.
“RIL’s well-diversified business model makes it a perfect growth story and the company is well-positioned to incubate new business and pursue inorganic opportunities with liquid BS. We maintain ‘BUY’ call on the stock with a target price of Rs 2,955 per share,” it added.
JP Morgan said that the recent announcement to reevaluate the deal with Saudi Aramco pertaining to the O2C business will have limited financial impact. The brokerage house has a ‘neutral’ rating on the stock with a target price of Rs 2,575 per share.
In August 2019, RIL and Aramco signed a letter of intent for the oil giant to potentially acquire a 20 per cent stake in the Indian conglomerate, but the deal was delayed as oil prices and demand crashed last year due to the pandemic.
In October, Reliance said it had won shareholders’ backing to appoint Saudi Aramco Chairman Yasir Al-Rumayyan as an independent director to its board.
