RIL gains 2% on report co discusses stake sale with Aramco; up 7% this week

According to a report by Financial Times, RIL has held talks with Saudi Aramco on a cash and share deal for sale of a 20 per cent stake in its oil refining and petrochemical arm

Reliance Industries shares advanced 2.4 per cent in the intra-day deals on Thursday to hit a high of Rs 2,045 apiece on the BSE after a report suggested that the Mukesh Ambani controlled company has held talks with Saudi Aramco on a cash and share deal for sale of a 20 per cent stake in its oil refining and petrochemical arm.

"Aramco is weighing paying for the stake with its shares initially and then staggered cash payments over several years... The proportion of shares versus cash was still up for debate and terms had yet to be finalised," said a report by Financial Times.

The report comes soon after Saudi Arabia's Crown Prince Mohammed bin Salman late on Tuesday hinted at talks to sell a minority stake in the Saudi national oil company to a foreign investor."I don't want to give any promises but there's a discussion for the acquisition of 1 per cent," he had said in a television interview. READ HERE

He did not give details of the deal or the parties involved but added that it would be "very important in strengthening Aramco's sales in the country where this company resides".

A stake in Reliance's O2C business would give Aramco an entry into one of the world's fastest-growing fuel markets. It would also give a ready-made market for 5 lakh barrels per day of its Arabian crude and offering a potentially bigger downstream role in the future.

Muksh Ambani had in August 2019 announced talks for the sale of a 20 per cent stake in the oil-to-chemicals (O2C) business, for $75 billion, which comprises its twin oil refineries at Jamnagar in Gujarat and petrochemical assets, to the world's largest oil exporter. The deal was to conclude by March 2020 but has been delayed for reasons not disclosed by either company.

So far in the current calendar year, the stock of RIL has gained just 0.5 per cent as against a 4 per cent gain in the benchmark S&P BSE Sensex. However, with today's gain, the stock of oil to telecom conglomerate is up 7 per cent so far in the current week. In comparison, the Sensex index has added 5 per cent on the BSE.

RIL is slated to report its March quarter results on Friday and analysts expect the company may witness an increase of 8 per cent (on average) in its consolidated earnings before interest, tax, depreciation, and amortisation (Ebitda) in the March quarter (Q4), led by strong improvement in the profit of Jio, its telecom business. Most analysts expect RIL’s consolidated top line to grow in the single-digits in Q4’FY21 over last year, with a handful expecting it to rise between 13-17 per cent. The net profit, however, is expected to rise 78-141 per cent.

Further, analysts see good recovery in petrochemical and refining margins compared to the December 2020 quarter. “We estimate GRMs (gross refining margins) to increase sequentially, led by better diesel and gasoline cracks,” said Edelweiss, which estimates O2C Ebitda to rise 23.8 per cent sequentially and decline 3.8 per cent YoY. READ ABOUT IT HERE