RIL shares gain nearly 1.5% post acquisition of majority stake in Netmeds

Shares of Reliance Industries (RIL) rallied as much as 1.47 per cent to Rs 2,150 apiece on the BSE on Wednesday after the Mukesh Ambani-owned conglomerate on Tuesday announced the acquisition of a majority equity stake in Chennai-based online pharmacy delivery startup Netmeds (Vitalic Health Pvt. Ltd) for a cash consideration of approximately Rs 620 crore. 

At 09:23 AM, the stock was ruling at Rs 2,138.40, up nearly 1 per cent against Tuesday's close of Rs 2,118.75. In comparison, the benchmark S&P BSE Sensex was trading over 0.5 per cent higher at 38,736.60 levels. RIL's shares had hit an all-time high of Rs 2,198.70 on July 27, 2020, while their 52-week low level stands at Rs 867.82, hit on March 23. 

RIL's acquisition comes at a time when arch-rival Amazon has just started selling pharmaceutical products in Bangalore markets. Also, two other prominent players Medlife and PharmEasy are now heading for a merger to create a have agreed for a merger, to create a large combined entity in the online pharmacy space. CLICK HERE TO READ FULL REPORT

"This investment is aligned with our commitment to provide digital access for everyone in India. The addition of Netmeds enhances Reliance Retail’s ability to provide good quality and affordable health care products and services and also broadens its digital commerce proposition to include most daily essential needs of consumers," Isha Ambani, Director, RRVL, said.

"Netmeds acquisition gives RIL entry into the online pharmacy space. The total medicine market is $18 - 19 billion (online is 3 - 3.5 per cent market) and the margins are low in online pharmacy. Thus, RIL could expand the online pharmacy market in India, notes analysts with the global brokerage firm, Credit Suisse. 

It is possible that RIL may go for an aggregator business model, the brokerage adds.