RIL shares hit fresh 52-wk high; stock just shy of Rs 3,000-mark, mcap tops Rs 20L cr

Shares of Reliance Industries Ltd (RIL) surged more during the trading session on Thursday after the company announced a binding agreement to form a joint venture (JV) with Viacom 18 and Disney to merge the media undertakings. The stock scaled its new life-time highs.

RIL would become a dominant player in the Indian media space following this deal, given the combination of distribution muscle and an enviable portfolio of TV channels, sports rights and digital assets. RIL will be investing Rs 1,150 crore in the JV for its growth strategy and the transaction values the JV at Rs 70,400 crore.

Following the announcement, shares of RIL surged more than 3.12 per cent to hit a new 52-week high of Rs 2,999.85 on Thursday, commanding a total market capitalization of about 20.3 lakh crore. The stock had settled at Rs 2,909 in the previous trading session on Wednesday.

RIL will own 16.34 per cent stake in the JV, while Viacom18 will have 46.82 per cent stkane and Disney to get 36.84 per cent stake. Viacom18 is a subsidiary of TV18 Broadcast Ltd, which in turn is a subsidiary of Network18 Media & Investments Ltd, in which RIL holds a 73.15 per cent stake.

The proposed JV includes JioCinema and Star India (Colors, StarPlus, StarGOLD, Star Sports and Sports18) and the JV will be controlled by RIL, said JM Financial. RIL has industry leading capabilities across businesses to drive robust 14-15 per cent EPS CAGR over the next 3-5 years, it said.

"Given that RIL’s effective stake in Viacom18 is 71 per cent, RIL’s effective stake in the JV could be 49.6 per cent. Hence, net value from the JV for RIL could be Rs 23,400 crore or Rs 35 per cent share. We reiterate 'buy' on RIL with an unchanged target price of Rs 3,050 as we believe net debt concerns are behind us," added JM Financial.

Motilal Oswal said the deal would give RIL a larger pie in the media and entertainment business. The JV will have exclusive rights to distribute Disney films and productions in India, it noted. The brokerage suggested a target price of Rs 3,210 on the stock. Global brokerage firm Jefferies has  maintained a 'buy' rating on RIL with a target price of Rs 3,140.