Reliance Industries hits record high; m-cap crosses Rs 15 trillion mark

The stock has gained 10 per cent in the past two trading days after Silver Lake on Wednesday agreed to invest Rs 7,500 crore ($1 billion) into Reliance Retail Ventures (RRVL).

Shares of Reliance Industries (RIL) hit a record high of Rs 2,344, up 8.4 per cent on the BSE in the intra-day trade on Thursday, with its market-capitalisation (market-cap) crossing Rs 15 trillion mark for the first time ever. It surpassed its previous high of Rs 2,198.70, touched on July 27, 2020 in the intra-day trade. At the end of day, the fully paid RIL’s shares, however, gave up some of the intraday gain but still managed to close 7 percent higher at Rs 2,314.65 per share with a market cap of Rs 14.67 trillion.

The stock has gained 11 per cent in the past two trading days after Silver Lake on Wednesday agreed to invest Rs 7,500 crore ($1 billion) into Reliance Retail Ventures (RRVL). Reliance Retail, a subsidiary of RRVL, operates India's largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its around 12,000 stores nationwide.

On the other hand, the partly paid (PP) shares of the company hit the upper circuit of 10 per cent at Rs 1,394.55 on the BSE. The market cap of PP shares was at Rs 58,937 crore, taking the combined market cap to Rs 15.26 trillion on Thursday.

Amazon to buy stake?

Meanwhile, according to news reports, Mukesh Ambani-led oil-to-telecom conglomerate Reliance Industries Ltd (RIL) is offering to sell roughly $20 billion worth of stake in its retail arm, Reliance Retail, to Amazon. CLICK HERE TO READ FULL REPORT

According to a Bloomberg report, KKR & Co. is in advanced talks to invest at least $1 billion in the retail business of RIL. "KKR is in discussions for a stake in RRVL, a unit of the largest retailer in India, said the people, who asked not to be identified because the information isn’t public. The private equity firm could invest as much as $1.5 billion and an announcement could come as soon as this month," Bloomberg reported. CLICK HERE FOR FULL REPORT

“Recent media reports also indicate Reliance Retail may offer stake to investors in Jio Platform (telecom). Reliance Retail also recently announced acquisition of Future Group. While these developments may raise concern, we believe there is enough growth headroom for peers given the retail opportunity,” analysts at Jefferies said in a stock update.

Analysts at KRChoksey Shares and Securities have reiterated a “BUY” rating on the stock with a target price of Rs 2,394. "Like Jio platforms, Reliance Retail is also scouting for global strategic investors for partnership. Post the Reliance-Future deal, the entity becomes India’s leading retailer with presence in different retail formats and with a robust back-end infrastructure. This will facilitate to bring in global investors to unlock value for the Reliance shareholders," the brokerage firm said.

Those at Morgan Stanley, too, have maintained a buy rating on the stock with a target price of Rs 2,247. "We see capital allocation, execution and de-gearing as key to the next leg of stock outperformance. With industry consolidtion picking up pace in telecom, retail and global refining, we see RIL emerging stronger post Covid-19 and margins should surprise as pricing power rises," wrote Mayank Maheshwari and Akash Mehta of Morgan Stanley in a September 9 co-authored note.