Please refer to important disclosures at the end of this report
1
Reliance Industries Ltd. (RIL) is India’s largest company with a dominant presence
in Refining, Petrochemicals, Telecom and Retail businesses. RIL has built up a
dominant telecom business and has already attained market leader status with
38.75 cr. subscribers at the end of Q4FY20. The company has also built a very
strong retail business which is the largest organized retailing company in India.
Refining and petrochemicals business would be a stable low growth business for
RIL going forward.
We believe that the Telecom business will witness robust growth over next few
years due to tariff hikes and shift of subscribers from Vodafone Idea to other
telecom players. The retail business too would be a key value driver for the
company and would now also look at leveraging on technology of Jio platforms
in order to expand it’s model to online from being a pure offline player.
The Company has recently been monetizing it’s stake in JIO Platforms which is the
digital arm of the company and also the holding company for the telecom
business. The company has so far sold 14.8% stake in JIO Platforms for a total
consideration of ` 67,195 cr. to marquee investors like Facebook, Silver lake,
General Atlantic and Vista. The consideration received by the company for it’s
stake in JIO Platforms along with the proceeds of the right issue will be used to
repay debt.
Outlook & Recommendation: The Company is offering shares to existing investors
in the ratio of 1:15 at a price of ` 1,257 per share out of which 25% needs to be
paid on application while 25% would need to be paid in May 2021 and balance
50% in November 2021. We are positive on the future prospects of the company
on the back of strong traction in digital and retail business and currently have a
BUY rating on the stock with a SOTP based target price of ` 1,748. We would
therefore recommend investors to SUBSCRIBE to the rights issue.
Key Financials (Standalone)
Y/E March (` cr)
FY19
FY20
FY21E
FY22E
Net Sales
3,85,501
3,50,880
3,73,215
4,57,539
% chg
32.9%
-9.0%
6.4%
22.6%
Net Profit
35,163
30,903
30,272
37,510
% chg
4.6%
-12.1%
-2.0%
23.9%
EBITDA (%)
15.3%
14.8%
13.8%
13.3%
EPS (Rs)
55.5
48.8
47.8
59.2
P/E (x)
25.4
28.9
29.5
23.8
P/BV (x)
2.2
2.0
1.9
1.9
RoE (%)
8.7%
8.4%
6.4%
7.8%
RoCE (%)
10.5%
9.2%
8.4%
10.0%
EV/EBITDA
29.4
29.1
34.7
29.4
EV/Sales
3.2
3.7
4.8
3.9
Source: Company, Angel Research; Note: Valuation ratios based at closing price for 19
th
May
2020.
SUBSCRIBE
Issue Open: May 20, 2020
Issue Close: June 03, 2020
Stock Info
Sector Diversified
Market Cap (` cr) 892,626
52 Week High / Low 1603/867
Face Value (`) 10
BSE Sensex 30,196
Nifty 8,879
Reuters Code RELI.NS
Bloomberg Code RIL.IN
Shareholding Pattern (%)
Promoters 48.9
MF / Banks / Indian Fls
13.5
FII / NRIs / OCBs 23.5
Indian Public / Others 14.1
Issue size (amt): ` 53,125cr
Offer Price ` 1,257
Post Eq. Paid up Capital: ` 6,766cr
Present Eq. Paid up Capital: ` 6,339cr
Rights Offer: 46.26cr Shares
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
May-19
Aug-19
Nov-19
Feb-20
May-20
RELIANCE INDUSTRIES LTD. (RIL)
Right Issue | Diversified
May 20, 2020
Reliance Industries Limited | Rights Issue Note
May 20, 20
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities
Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public offering of securities of
the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National
Commodity & Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and
Investment Adviser with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered
entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164.
Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities
Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public offering of securities of
the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
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contrary view, if any
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Ratings (Based on Expected Returns: Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Over 12 months investment period) Reduce (-5% to -15%) Sell (< -15%)
Hold (Fresh purchase not recommended)