The issue of Reliance Industries Rights Issue has been oversubscribed with 2 more days for subscription and considering its attractions, analysts have been recommending subscribing to the issue. And if you have not yet considered the offer, here's why it should be a part of your portfolio if you are a RIL shareholder:
1. You will get RIL stock at a discount to current market price:
Reliance industries shareholder by subscribing to the issue will get RIL shares at just Rs. 1257 per share in comparison to its current market Rs. 1529.35. And here in you should be having the stock in your demat account as on May 14, 2020 which was the record date for the issue.
2. Voluminous growth expected for the company's digital and retail business:
Brokerage firm Angel broking is of the view that the company's digital and retail business over a period of time will be the key growth drivers for the company over the next few years. "We believe that the telecom and retail business will be key growth drivers for the company over the next few years while the company's foray into e-commerce through its JioMart platform will be a value creator for the shareholders in the long run," said Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd.
3. Recent back to back deals are on course to make the conglomerate firm debt free:
As per the brokerage firm, the SOTP based target price of RIL is Rs 1,748, which implies an upward potential of 22% in the share price of RIL. And further it instills confidence among consumer segment of its transformation into a digital play.
4. Full amount for subscribing has not to be paid at one go:
The price of rights issue has not to be paid at one go and rather up till November 21 in installments and the last balance on call by the company.
5. Promoter's pledge to subscribe to remaining shares are indicative of company's confidence in its future prospects:
To their entitlement as well as the remaining shares that remain unsubscribed as part of the rights issue, promoters have pledged to full subscription.
6. Better valuation anticipated for the firm as it pares debt in Fy21:
According to Motilal Oswal, RIL's consumer and telecom business now accounts for around 78% of the conglomerate's valuation. The brokerage values RIL's retail business at Rs 500 a share, digital business at Rs 760 per share while the core business is valued at just Rs 358 per share.