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Reliance Industries share price at record high after Mubadala’s investment in Jio Platforms

Reliance Industries share price at record high after Mubadala’s investment in Jio Platforms

Reliance Industries share price at record high after Mubadala’s investment in Jio Platforms
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By Ankit Gohel  Jun 5, 2020 11:20:56 AM IST (Updated)

Reliance Industries Ltd's shares touched a record high of Rs 1617.70 apiece, rising 2.38 percent Friday on Abu Dhabi-based Mubadala's Rs 9,093.60 crore investment in Jio Platforms for a 1.85 percent stake.

Shares of Reliance Industries Ltd (RIL) touched a record high of Rs 1617.70 apiece, rising 2.38 percent in intra-day trade on Friday after the oil-to-retail-digital conglomerate announced that Abu Dhabi-based sovereign investor Mubadala will invest Rs 9,093.60 crore in its digital arm Jio Platforms for a 1.85 percent stake.

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The market cap of the Mukesh Ambani-led conglomerate crossed Rs 10 lakh crore. The stock has rallied 84.7 percent since its 52-week low of Rs 875.70 on March 23.
With Mubadala's investment, Jio Platforms has raised Rs 87,655.35 crore from leading investors that include Facebook, Silver Lake Partners, Vista Equity Partners, General Atlantic and KKR in six weeks, making the latest deal its sixth one.
The Mubadala deal values Jio Platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.
“The investment by Mubadala and other 5 prior investors will help in pegging the equity value of Jio Platforms and also improve the cash flow, thus accelerating the company’s deleveraging initiative. We expect few more such marquee deals in the next 1-2 years, as this route provides capital as well as advanced technologies,” Axis Capital said in a note.
The brokerage maintains a 'buy' rating on the RIL stock with a target price of Rs 1,700.
Meanwhile, RIL’s rights issue also received an overwhelming response from investors, being subscribed 158.8 percent. The total bids received for RIL’s Rights shares stands at 67.11 crore, well over the 42.26 crore shares on the offer by 58.8 percent. The issue was opened for the subscription of shareholders on May 20 and closed on June 3.
RIL's net debt is likely to fall 92 percent after the latest investment by Abu Dhabi-based sovereign investor Mubadala.
Apart from securing investments worth Rs 87,655 crore in six weeks and the Rs 53,125 crore rights issue, the company had received investment by British Petroleum in FY2019-20 for Rs 7,000 crore which overall have led to this massive decline in RIL's debt.
Last year, the company had a net debt of Rs 1.61 lakh crore, built up as it undertook capital expenditure over the past few years in expanding its telecom and retail ventures, as well as a few projects on the refining side. Of that, the company has already raised Rs 1.47 lakh crore counting in the latest investment.
(Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)
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