Reliance Industries stock gains as Sensex falls; buzz of more investment in Jio does rounds on D-Street

Reliance Industries Ltd (RIL) share price gained 0.75% in the late morning trade on Thursday, defying the fall in headline indices Sensex and Nifty, which mostly traded in red today. The oil-to-telecom conglomerate, owned by India’s richest man Mukesh Ambani, has staged a remarkable recovery since reaching a low of Rs 883 per share on March 23, gaining 66% since then to now trade at Rs 1,470 apiece. After a stake sale in its telecommunications arm Reliance Jio to social media giant Facebook and PE firm Silver Lake, the buzz around Dalal Street links Ambani’s RIL to software giant Microsoft.

A market participant said that there are rumors doing the rounds that Reliance Industries could be in talks with Microsoft for potential investment opportunities in Reliance Jio. Financial Express has sent an Email to Reliance Industries seeking comments.

RIL is favoured by leading brokerage firms with a ‘buy’ rating on the scrip. RIL’s plan to go zero-net-debt by the end of this fiscal and its subsequent action towards that goal have pulled investors towards the stock. RIL’s decision to raise funds from the public through a rights issue of Rs 53,000 crore, biggest ever to enter the Indian market also has analysts upbeat. “The rights issue along with the Jio-Facebook deal and fuel retailing with energy giant BP is expected to help RIL bag a total of Rs 1.03 lakh crore, said brokerage and research firm Motilal Oswal in a recent note. The brokerage values Reliance Industries at Rs 1,618 per share.

Another leading brokerage firm, Edelweiss Securities has a target price of Rs 1,678 per share for RIL owing to the better-than-expected gross refining margins. RIL has been able to consistently achieve better GRMs versus Singapore complex margins, owing to higher complexity and efficient crude processing. Seeing the recent surge in share price, HDFC Securities is a little wary of the stock, downgrading it to ‘add’ from a ‘buy’ rating, but still expects it to achieve the Rs 1,560 target price.

The retail and the telecom segment of the company have posted significant positive results luring investors in. Another stake sale by RIL could see it achieve the target of going net-debt free or at least reach close to that goal ahead of the time-frame set by Mukesh Ambani in August last year. After adding Facebook to his friend’s list Ambani has started efforts to rope in local kirana stores across India for his platform JioMart. A deal with Microsoft could help RIL change its play from an oil company to a technology one as experts hinted post the Facebook deal.

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