Listing of Securities of Reliance Industries Ltd - Partly Paid-up EquityShares (Rights Issue)
Date: Monday, 15-Jun'20
BSE Scrip Code : 890147
Group: A
Nse Scrip ID : RELIANCEPP
Right- ISIN No. : IN9002A01024
Reliance Rights, listing tomorrow - Is it an investment opportunity?
RIL closing price on 11.6.20: INR 1,538
RIL Rights Issue Offer Price: INR 1,257
The difference of INR 281 or 22%
Q: At what price rights shares will be listed?
A: Most likely above INR 600 [ 314.25 1st instalment of rights + 281 difference + 7.5 expected DPS for FY21E = INR 603]
As you pay balance 942.75 [ 314.25 2nd instalment in May 2021 and 628.50 final instalments in November 2021] the final price paid by the investor: INR 1,546 [ 603 + 943]
The difference of 281 could be explained in 2 parts as under:
(1) Cost of Funds: @ 10% rate of interest on balance investment sum of 942.75 (314.25 payable in May 2021 + 628.50 in November 2021), it is: 126
(2) Arbitrage Premium: balance amount of 155 (281-126) which is 16.44% cost of 942.75, payable over 18 months (equivalent to 1.37% p.m. premium for buying long-dated call options)
Our view:
Reliance Jio Platforms is a catalyst for higher valuations of RIL. It holds the promise of $ 200 billion valuations (current: $ 68 billion) over the next 24 months. It is likely to power 5 or 6 business platforms comprising of: Retail | Media & Entertainment | Education | Health Care | Gaming | Payments. Various apps including JioMart, Jio Meets will pull in subscribers using the (1) mobility (2) FTTH (Fibre to Home) and (3) Enterprise Network. The revenue model is expected to be a combination of subscription and transaction-based.
Reliance O2C, an Oil to Chemical company is likely to attract $ 15 billion (1.15 crore) in Q2 or Q3 of current FY.
Reliance Retail is being integrated under Jio Platforms to form the O2O model (Offline 2 Online), powered by apps like JioMart and AJIO.
Given these possibilities, it is expected that consumer-facing business in Jio Platforms and Retail will equal or surpass the current profits earned from Oil business in next 2-3 years as digital business are highly scalable.
Coupled with monetisation of various business and faster than normal scale up in business performance, We expect RIL stock to appreciate @ 25-30% CAGR over next 3-5 years.
Reliance Rights shares are becoming an attractive investments proposition as investing at an expected listed price of 600, could give ROI of more than 60% when it appreciates to a projected price of 1000 in next 9-12 months against the projected price of 2000 fully paid up RIL, then.
You can get Reliance Intraday Tips here.
Date: Monday, 15-Jun'20
BSE Scrip Code : 890147
Group: A
Nse Scrip ID : RELIANCEPP
Reliance Rights, listing tomorrow - Is it an investment opportunity?
RIL closing price on 11.6.20: INR 1,538
RIL Rights Issue Offer Price: INR 1,257
The difference of INR 281 or 22%
Q: At what price rights shares will be listed?
A: Most likely above INR 600 [ 314.25 1st instalment of rights + 281 difference + 7.5 expected DPS for FY21E = INR 603]
As you pay balance 942.75 [ 314.25 2nd instalment in May 2021 and 628.50 final instalments in November 2021] the final price paid by the investor: INR 1,546 [ 603 + 943]
The difference of 281 could be explained in 2 parts as under:
(1) Cost of Funds: @ 10% rate of interest on balance investment sum of 942.75 (314.25 payable in May 2021 + 628.50 in November 2021), it is: 126
(2) Arbitrage Premium: balance amount of 155 (281-126) which is 16.44% cost of 942.75, payable over 18 months (equivalent to 1.37% p.m. premium for buying long-dated call options)
Our view:
Reliance Jio Platforms is a catalyst for higher valuations of RIL. It holds the promise of $ 200 billion valuations (current: $ 68 billion) over the next 24 months. It is likely to power 5 or 6 business platforms comprising of: Retail | Media & Entertainment | Education | Health Care | Gaming | Payments. Various apps including JioMart, Jio Meets will pull in subscribers using the (1) mobility (2) FTTH (Fibre to Home) and (3) Enterprise Network. The revenue model is expected to be a combination of subscription and transaction-based.
Reliance O2C, an Oil to Chemical company is likely to attract $ 15 billion (1.15 crore) in Q2 or Q3 of current FY.
Reliance Retail is being integrated under Jio Platforms to form the O2O model (Offline 2 Online), powered by apps like JioMart and AJIO.
Given these possibilities, it is expected that consumer-facing business in Jio Platforms and Retail will equal or surpass the current profits earned from Oil business in next 2-3 years as digital business are highly scalable.
Coupled with monetisation of various business and faster than normal scale up in business performance, We expect RIL stock to appreciate @ 25-30% CAGR over next 3-5 years.
Reliance Rights shares are becoming an attractive investments proposition as investing at an expected listed price of 600, could give ROI of more than 60% when it appreciates to a projected price of 1000 in next 9-12 months against the projected price of 2000 fully paid up RIL, then.
You can get Reliance Intraday Tips here.
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