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MarketScreener Homepage  >  Equities  >  NSE India Stock Exchange  >  Reliance Industries Ltd    RELIANCE   INE002A01018

RELIANCE INDUSTRIES LTD

(RELIANCE)
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India's Reliance sees oil-to-chemicals business spin off in Sept qtr

02/23/2021 | 01:13am EST

Feb 23 (Reuters) - India's Reliance Industries Ltd expects to hive off its oil-to-chemicals (O2C) business into a 100% subsidiary in the September quarter, the company said on Tuesday, paving the way for a stake sale in the new company.

Reliance, which operates the world's biggest refining complex, is in talks with Saudi Aramco to sell a fifth of its O2C business.

"Reorganization of O2C Business facilitates participation by strategic investors and marquee sector focused investors," the oil-to-telecom conglomerate said in a presentation to investors.

The new entity, Reliance O2C Ltd, will subsume Reliance's investment in oil refining, marketing and petrochemical business. After the re-organisation, Reliance's stake in Retail Ventures will be 85.1%, while it will hold 67.3% in its telecom and digital arm, Jio Platforms.

Reliance would extend a $25 billion long-term loan to Reliance O2C, which the new entity could repay through a stake sale.

Shares of Reliance Industries, which said creation of the new subsidiary will not impact its consolidated financials, were up 1.6% at 2,041.70 rupees by 0610 GMT.

The demerger move for O2C is a step towards monetisation and acceleration of Reliance's new energy and material plans into batteries, hydrogen, renewables and carbon capture, said Morgan Stanley in a report. "All of which point to the next leg of multiple expansion and clarity on the next investment cycle."

"Until the stake sale is completed, there will be no subordination risk for Reliance's lenders, as the company will continue to have full access to the O2C business' cash flows, given its full ownership of and no external debt at the new subsidiary," said Sweta Patodia, analyst, Corporate Finance Group, Moody’s Investors Service.

The group, majority owned by billionaire Mukesh Ambani, aims to become net carbon zero by 2035 and invest in developing renewable energy systems to meet energy demand and speed up the transition from traditional carbon-based fuels to hydrogen.

(Reporting by Derek Francis and Sachin Ravikumar in Bengaluru, Nidhi Verma in New Delhi; Editing by Vinay Dwivedi)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
LONDON BRENT OIL 0.41% 63.58 Delayed Quote.26.44%
RELIANCE INDUSTRIES LTD 0.20% 2106 Delayed Quote.5.86%
SAUDI ARABIAN OIL COMPANY 0.15% 34.5 End-of-day quote.-1.43%
WTI 0.64% 60.64 Delayed Quote.29.66%
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Financials
Sales 2021 5 116 B 69 728 M 69 728 M
Net income 2021 466 B 6 348 M 6 348 M
Net Debt 2021 271 B 3 700 M 3 700 M
P/E ratio 2021 30,4x
Yield 2021 0,34%
Capitalization 13 344 B 182 B 182 B
EV / Sales 2021 2,66x
EV / Sales 2022 2,00x
Nbr of Employees 195 618
Free-Float 50,4%
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Mean consensus OUTPERFORM
Number of Analysts 29
Average target price 2 184,67 INR
Last Close Price 2 101,70 INR
Spread / Highest target 19,0%
Spread / Average Target 3,95%
Spread / Lowest Target -35,8%
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Managers and Directors
NameTitle
Mukesh Dhirubhai Ambani Chairman & Managing Director
Srikanth Venkatachari Joint Chief Financial Officer
Alok Agarwal Joint Chief Financial Officer
K. Sethuraman Group Secretary & Chief Compliance Officer
Savithri Parekh Joint Secretary & Compliance Officer
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