InvestorQ : Why did Reliance Industries rally by nearly 10% during the week? Is the stock a buy at these prices?
shrinidhi Rajan made post

Why did Reliance Industries rally by nearly 10% during the week? Is the stock a buy at these prices?

Answer
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Riya Dwivedi answered.
1 year ago


Reliance Industries rallied sharply in the aftermath of the 42nd board meeting held during the last week. There were quite a few positives for Reliance Industries. It agreed to sell 20% stake in the oil and chemicals business at $15 billion to Saudi Aramco valuing the oil and chemicals business at $75 billion. To that you add the Jio and retail valuation of another $70 billion, then you have a total valuation of the company at around $140 billion, which is 20% higher than current levels even after considering the rally. RIL has also promised to get completely out of debt by March 2021 and will be using its internal reserves of $19 billion and the cash from Aramco of $15 billion to repay its current outstanding debt of $22 billion. This has also favoured the stock price.

From an investment point of view, the stuck must be there in your portfolio. Of course, there is one thing you must be cautious about. Over the next 2 years, RIL will become a virtual holding company after all these businesses are hived off into separate entities. Most holding companies get valued at a discount so that could a risk for you as an investor.