RIL top Sensex gainer today, share price jumps over 3.5% after Saudi PIF investment in Reliance Retail

RIL share price jumped 3 per cent to Rs 2,013.75 apiece intraday on BSE, a day after the Mukesh Ambani-led firm announced that The Public Investment Fund of Saudi Arabia will invest Rs 9,555 crore in Reliance Retail for an equity stake of 2.04 per cent. Earlier this week, RIL shares plunged 9 per cent, since then the stock has managed to gain 7.2 per cent. Today’s surge in the stock price was fuelled by the investment announcement by Saudi PIF in RIL’s retail business. So far, Reliance Industries Ltd has raised Rs 47,265 crore by selling 10.26 per cent stake in Reliance Retail Ventures Ltd (RRVL). “Similar to previous investment, we understand this is fresh capital infusion in RRVL. We have ascribed Rs 4.4t equity value to RRVL, thus, this deal is valued at 4 per cent premium to our valuation, implying Rs 639 per share of RRVL for 90 per cent stake, taking our target price for RIL marginally up,” said Hemang Jani, Head- Equity Strategy, B&D, Motilal Oswal Financial Services.

This recent investment in RRVL follows PIF’s earlier acquisition of a 2.32 per cent stake in Jio Platforms, the digital services subsidiary of Reliance Industries. RRVL is RIL’s 90 per cent subsidiary with rev/EBITDA of Rs 1,629b / INR97b for FY20. “Its core rev/EBITDA including grocery, fashion and electronics stands at INR928b/INR86.3b,” Hemang Jani said. The firm has on-boarded over half a dozen global companies including Silver Lake, KKR, General Atlantic, Abu Dhabi sovereign wealth fund Mubadala Investment Co, GIC, TPG and ADIA.

RIL shares ended 3.78 per cent higher at Rs 2,029 apiece, as compared to a 1.34 per cent rise in S&P BSE Sensex. Last week, the oil-to-telecom conglomerate reported a net profit of Rs 10,602 crore in the July-September quarter, down from Rs 15,055 crore in the same period last year as revenues dropped.