Reliance Industries may launch IPO for Jio and Retail
Reliance Industries (RIL) may list its two subsidiaries separately in the stock market. These units are Jio and Reliance Retail. Last week, RIL said that it has become completely debt free.
Bernstein Research has made this estimate in its report on Wednesday. It has said that RIL can unlock the value of its units for shareholders.
Recently, RIL has raised $ 22.3 billion by selling a 24.7 percent stake in Jio Platforms. Social media company Facebook has bought a 9.99 percent stake in Jio. The deal has been approved by the Competition Commission of India (CCI).
Reliance Industries has also raised Rs 53,124 crore through a rights issue. In this way the company has become pure debt-free. The company’s telecom unit Jio Infocomm is part of its digital company Jio Platforms.
Bernstein Research said, “The company is not in debt after selling a 24.7 per cent stake in Jio and a rights issue. It is expected that in the next three to four years the company may list them separately by offering an IPO of its telecom and retail businesses. Value will be unlocked for investors. ”
Seeing the balance sheet, it is known that Reliance has improved its financial position. The company had a net debt to equity ratio of 0.51 in FY 2019-20, which has come down to just 0.06 times in FY 2020-21. This is the lowest in the past decade.
Also, with Reliance’s $ 15 billion agreement with Saudi Aramco and fresh cash flow, its debt is likely to be reduced in the coming years. The company negotiated with Aramco to sell a 20 percent stake in its oil and petrochemical business for $ 75 billion.
The analyst said, “The big question is, what will Reliance do with this much cash? We believe that the company can correct its balance sheet and reduce its liabilities. This includes delayed payments and provisioned amounts. Which is almost equal to Rs 50,000 crore. ”
Bernstein believes that the company can expand the retail and internet business. For this, chances of mergers and acquisitions are quite strong. The accompanying company can revive the refining and petrochem business. According to this, the shareholders of Reliance will get a lot of cash.
Earnings are going to be soft in FY 2020-21 due to Corona virus, but Reliance will get the benefit of telecom, retail and new round of business. The brokerage has increased the company’s target price from Rs 1,720 to Rs 1,870.