RIL hits over 2-month high on Sebi nod to Future Group-Reliance Retail deal

Shares of Reliance Industries (RIL) extended their winning run to the fourth straight day, up 3 per cent on the BSE, to hit an over two-month high of Rs 2,110 in Thursday's early morning trade. The stock was trading at its highest level since October 23, 2020. It hit a record high of Rs 2,369, on September 16, 2020.

Despite a run-up of 14 per cent from its low of Rs 1,856 touched on December 21, the stock has underperformed the market and fallen 1 per cent in the past three months as against a 23 per cent rally in the S&P BSE Sensex.

According to a Press Trust of India report, market regulator Securities and Exchange Board of India (SEBI) gave a go-ahead on Wednesday to Future Group's scheme of arrangement and sale of assets to Reliance, based on which the Bombay Stock Exchange also granted its "no adverse observation" report to the Rs 24,713-crore deal. The Sebi allowed the deal with some riders, five months after it was announced last August, the report said.

Meanwhile, RIL is scheduled to report its October-December quarter (Q3FY21) earnings on Friday, January 22. Driven by a strong rebound in petrochemicals business, and supported by growth in the retail segment, RIL is expected to clock a stellar sequential improvement in its net profit for Q3FY21.

Over the last five years, RIL has seen a huge transformation from being an energy company to becoming a market leader in both the digital and retail space. The contribution from its standalone business to consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) has declined to 60 per cent in FY20 from 85 per cent in FY15 and is likely to decrease to 45 per cent in FY23E.

Analysts are pencilling-in up to 32 per cent sequential growth in RIL’s consolidated net profit, pegged at Rs 12,600 crore, against a profit after tax (PAT) of Rs 9,567 crore reported in the September quarter of FY21 (Q2FY21).

Reliance Industries Limited (RIL)