Reliance Industries slips 7% in two days, loses over Rs 1-trn in market cap

Shares of Reliance Industries (RIL) were down 3 per cent at Rs 2,305 on the BSE in Tuesday’s intra-day, falling 7 per cent in the past two trading sessions, despite the company’s clarification on loan of Rs 750 crore granted to Shapoorji Pallonji Company by its arm Reliance Ventures Limited (RVL).

A sharp decline in stock price has seen, RIL’s market capitalisation decline by Rs 1.17 trillion in past two trading days. At 10:30 am, the stock traded 2.4 per cent lower at Rs 2,321 on the BSE, as compared to 0.47 per cent decline in the S&P BSE Sensex. The company’s market capitalisation stood at Rs 15.69 trillion, the BSE data showed.

“The grant of the loans described in the media report by Reliance Ventures Limited (RVL), a nonbanking financial company registered with RBI, to Sterling and Wilson Private Limited (SWPL) did not require any disclosure under Regulation 30 of LODR and therefore no disclosure was made by Reliance Industries Limited (RIL),” the company said in an exchange filing.

Reliance New Energy Limited (RNEL) (formerly known as Reliance New Energy Solar Limited) entered into definitive agreements on October 10, 2021, to acquire 40 per cent stake in Sterling and Wilson Renewable Energy Limited (SWREL) (formerly known as Sterling and Wilson Solar Limited).

RVL, in its ordinary course of business, by way of a separate arrangement, entered into two facility agreements with SWPL on October 10, 2021, to extend secured loans aggregating Rs.750 crore to SWPL (Facility Agreements). RVL is a wholly owned subsidiary of RIL, the company said.

Meanwhile, the company had reported December quarter results on Friday after market hours.

According to analysts, a strong performance in the October-December quarter (third quarter, or Q3) of 2021-22 (FY22), improving outlook across verticals, and marginal upward revision of estimates are expected to support the stock price of RIL. The country’s most valued company beat Street estimates on the operating profit front, aided by retail, oil-to-chemicals (O2C), and upstream segments in Q3.

Long term prospects and dominant standing of RIL in each of its product & service portfolio, provide comfort for long term value creation. RIL’s consumer business will be the growth driver, going ahead. The company has a strong balance sheet post fund raising while its traditional business will continue to generate steady cash flows, analysts at ICICI Securities said in result update.

RJio should see the benefit of tariff hikes accrue in the coming few quarters as we see healthy ARPU improvement. Furthermore, as RJio’s growth slows, Jio Platforms Ltd (its holding company) is keen to replicate the success of Wireless in other business streams, with aggressive plans and product launches in place, Motilal Oswal Financial Services said.

“We value Reliance Retail’s core business at 35x EV/EBITDA and assign 4x to Connectivity, arriving at TP of Rs 1,100 – after excluding the recent 10 per cent stake sale. Our premium valuation multiples capture the opportunity for rapid expansion in the Retail business and the aggressive rollout of digital ventures, including the JioMart platform,” the brokerage firm said, reiterate Buy, with target price of Rs 2,800/share.