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FY21 will be a year of deals for RIL, says Kotak Institutional Equities; raises target price to Rs 1,750

FY21 will be a year of deals for RIL, says Kotak Institutional Equities; raises target price to Rs 1,750

FY21 will be a year of deals for RIL, says Kotak Institutional Equities; raises target price to Rs 1,750
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By Mousumi Paul  Jun 15, 2020 9:07:24 PM IST (Published)

Ten public investments in Reliance Industries' technology arm Jio Platforms in the last seven weeks has raised the total investment to Rs 1,04,326.95 crore, the biggest FDI till-date in India. This trail of investments is likely to continue this year resulting in a total amount of  Rs 2,10,000 core said Kotak Institutional Equities in its recent report.

Ten public investments in Reliance Industries' technology arm Jio Platforms in the last seven weeks has raised the total investment to Rs 1,04,326.95 crore, the biggest FDI till-date in India. This trail of investments is likely to continue this year resulting in a total amount of  Rs 2,10,000 core said Kotak Institutional Equities in its recent report.

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As a result, the brokerage reinstated its 'BUY' rating on the stock with a revised target price of Rs 1,750 from Rs 1,650 earlier.
According to Kotak's report, a few large deals are under work-in-progress. Two large ones could be in offing in the near-term, i.e. sale of 20 percent stake in oil-to-chemicals business (O2C) business to Saudi Aramco, and monetization of fiber InvIT (infrastructure investment trusts).
The largest conglomerate of India RIL, had earlier announced multiple transactions to reduce overall net debt and off-balance sheet liabilities (InvITs) by a cumulative amount of Rs 2,10,000 core. The ongoing transactions except rights issuance are expected to complete over the next few months subject to necessary statutory approvals, added the report.
While making an interesting point, the brokerage said that the cash inflows through all these investments will be utilized for organic and inorganic investments rather than just paying debt.
It said, "The surplus amount may be invested in the treasury in interim while acting as a war chest for the company to look for opportunities amid ongoing adversities, which may complement any of its business segments. It may also be utilized to pursue organic plans such as accelerating the rollout of new commerce, FTTH (fiber-to-the-home), and enterprise businesses or bidding for 5G spectrum."
Post the rights issue, the promoter stake will inch up to 45.8 percent from 45.3 percent earlier, noted the report.
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