RIL shares scale new record, as D-Street tries to second-guess what's in store at July 15 AGM

RIL shares scale new record, as D-Street tries to second-guess what’s in store at July 15 AGM

Mumbai: Hopes are running high as the market is building up for Reliance Industries’ (RIL) annual general meeting (AGM) on Wednesday, July 15, after the country’s most-valued firm has had a year of stellar deal announcements since the last AGM.

Shares of the energy-to-telecom conglomerate traded at a new record high of Rs 1,932 on Monday.

RIL watchers say after a slew of big-bang announcements over the past few months, the AGM may just focus on the path ahead. The company management is widely expected to give more updates on the status of some of the announcements made at the last AGM, and also provide an update on media reports about ongoing talks for a stake buy in Future Group.

The oil-to-telecom conglomerate will hold its 43rd AGM through video conferencing (VC) or other audio-visual means (OAVM) this time due to the Covid-19 pandemic.

The vibes at the last AGM were euphoric with Chairman Mukesh Ambani, also India’s richest man, making a slew of big announcements such as a deal with Saudi Aramco, the world’s largest oil producer, to buy a 20 per cent stake in its oil-to-chemical business. The company, which had enormous debt on its books, also announced plans to be debt-free in 18 months. It has since claimed to have achieved that goal.

“The AGM could be lacklustre in terms of new announcements, given that a barrage of announcements are already out. They will be basking in the glory of managing to meet their debt-free goal well ahead of time,” said independent analyst Ambareesh Baliga about the forthcoming AGM. “A lot of announcements have already been made. We need to see what update they have on the Saudi Aramco deal,” Baliga said.

That is one of the key updates investors would be awaiting keenly. In the company’s latest annual report, Ambani said RIL was working to complete the contours of the strategic partnership with Aramco.

In a July 7 note, BofA Securities said among the key initiatives announced at the last AGM, RIL has completed strategic stake sales in Jio, petro-retail and cut net debt to zero. “We might get an update on the remaining two goal: Stake sale to Aramco and that in Reliance Retail,” BofA analysts said in a note.

JP Morgan said it would also look out for comments, updates or plans for commencing e-commerce/new commerce venture and the Aramco stake sale.

“.. our conversations with investors highlighted some expectations of an announcement of timelines for completion of the O2C stake sale, and any update that could imply closure of the deal in the next few months would be taken positively,” JP Morgan said in a July 6 note.

Swarnendu Bhushan, Research Analyst at Motilal Oswal Financial Services, said RIL would build up on whatever they have announced at the last AGM. “We have seen a lot of investments in Jio Platforms. We haven’t seen things move on the core business, particularly on the Saudi Aramco deal. We await more details on the same,” he said.

Siddharth Sedani, Vice president for equity advisory at Anand Rathi Shares and Stock Brokers, expects the AGM to provide an update on the Aramco deal. He expects the company lay out detailed plans for Jio after the mega fundraising, and provide a roadmap for at least next three years for the retail business.

“Investors could look for some news of further development on strategic stake sale in their core business – refining and petrochemicals,” said Gaurav Dua, Senior Vice-President and Head of Capital Market Strategy & Investments at Sharekhan by BNP Paribas. “With ample liquidity in their book after the Jio deals, it would be interesting to see how the group deploys the financial resources. We hope for a roadmap on how they plan to utilise it,” he said, adding that investors would also watch out for future plans for Jio and for unlocking value in the retail business.

RIL has raised in excess of Rs 170,000 crore since April, out of which Rs 117,588.45 crore has been collected from investors in Jio Platforms and another Rs 53,124.20 crore through a rights issue. The company achieved its net debt-free status much before its promised deadline of March 2021.

After the significant de-leveraging exercise, JP Morgan expects the AGM to offer updates on Reliance Retail in terms of large new commerce and e-commerce rollout. “While we do not expect any large strategic investor in Reliance Retail any time soon, this is a key potential event investors will be waiting for, especially as the Jio Platforms stake sale seems done,” JP Morgan said in a note.

BofA Securities expects Ambani to provide clarity on a deal with Future Group, after media reports indicated that negotiations between RIL and the Future Group for potential acquisition of Future Retail, Future Lifestyle Fashions and Future Supply Chain Solutions have reached a decisive phase, and RIL wants to sign an agreement before the forthcoming AGM.

BofA expects updates on how RIL is looking to capitalise on the digital trends and how it is going to leverage and nurture the start-up ecosystem. The brokerage also expects to hear on progress or update on other initiatives from last AGM such as home broadband, online grocery/new commerce initiatives, Jio First Day-First-Show along with a few new announcements.

RIL shares have rallied 20.46 per cent for the year to date, and have more than doubled from its March lows.

Source: ET Markets

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