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RIL share price rises over 3% as brokerages upbeat on deal with Silver Lake

Share price of Reliance Industries gained 3.02% intra day to Rs 1478.8 compared to the previous close of  Rs 1,435  on BSE

Aseem Thapliyal        Last Updated: May 5, 2020  | 16:32 IST
RIL share price rises over 3% as brokerages remain upbeat on deal with Silver Lake
Reliance Industries share stands higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages

Reliance Industries share price rose in trade today after brokerages maintained buy call on Silver Lake buying minority stake in Reliance Jio Platforms. Share price of Reliance Industries gained 3.02% intra day to Rs 1478.8 compared to the previous close of  Rs 1,435  on BSE. Reliance Industries share stands higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

Total 6.56  lakh shares changed hands amounting to turnover of Rs 96.08 crore.

Market cap of the firm stood at Rs 9.26 akh crore on BSE. The stock closed 1.78% or Rs 25 higher at Rs 1,461 in an otherwise falling market. Sensex ended 261 points lower at 31,453 and Nifty closed 87 points lower at 9,205. RIL stock price has gained 2.37% in one week and 35.6% in one month. However, it is down 3.44% since the beginning of this year.

Global tech investor Silver Lake will invest Rs 5,655.75 crore in Reliance Industries Jio Platforms at an equity value of Rs 4.9 lakh crore and an enterprise value of Rs 5.15 lakh crore. RIL said it represents 12.5 per cent premium to the equity valuation of the Facebook investment announced on April 22.

After the announcement, brokerage Motilal Oswal gave a target price of Rs 1,618, an upside of 13%.

Share Market Update: Sensex ends 261 points lower, Nifty at 9,205; SBI, Britannia, Bajaj Finance top losers

"A second deal in less than a month (following the mega RIL-FB tie-up) reaffirms the strong valuation of Jio Platforms and its global demand. Compared to the recently announced Facebook deal at INR4.4t post-money equity value, SilverLake's investment is at 12.5% premium on post-money equity basis and at 11.5% on enterprise basis.We have ascribed Rs 5.1 trillion as enterprise value, and thus, this deal is in line with our valuation for RJio, " Motilal Oswal said.

Brokerage CLSA too has maintained buy call on the stock with a target at Rs 1,770 per share.

Investment by Facebook & Silver Lake should help to position Jio as a tech major. The company should achieve its target to bring down net debt by Rs 1.5 lakh crore, CLSA said. Another stake sale in Jio and progress in InvIT stake sale are the major triggers, while Aramco deal was one of the major triggers as well, the brokerage  added.

Another brokerage JM Financial  maintained a  Buy call on the stock with target price of Rs 1,750.

"On a consolidated basis, the outstanding debt as on March 31 for RIL was at Rs 3.4 trillion while the cash and equivalents are at Rs 1.8 trillion. RIL has already announced plans to raise Rs 1.03 trillion in cash and indicated that Jio platform is also attracting global investors for a deal similar to Facebook. RIL also announced plans to carve out O2C business. We continue to remain positive on RIL on back of net-debt reduction and an improvement in telecom competitive scenario, " JM Financial said in a note.

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