Reliance Industries shares surge as much as 11% after Mukesh Ambani announces deal with Saudi Aramco

Reliance Industries Limited (RIL) shares on Tuesday surged as much as 11 percent in early trade to Rs 1,287, after Mukesh Ambani on Monday announced plans to sell stakes in the firm’s oil and chemicals business to Saudi oil giant Aramco and in fuel retail network to BP plc for Rs 1.15 lakh crore. Ambani announced that telecom unit Jio will begin offering fibre-based broadband services from next month. The surge in the shares of Reliance Industries marked its biggest intraday jump since 22 February, 2017. RIL shares were the top percentage gainer on the BSE benchmark in the morning session. The rally in the stock helped RIL reclaim the Rs 8 lakh-crore market capitalisation. Saudi Aramco will buy a 20 percent stake in the oil and chemicals business of RIL, including the 1.36 million barrels a day Jamnagar refining complex in Gujarat, for an enterprise value of $75 billion. BP will buy 49 percent stake in the firm’s 1,400 petrol pumps and aviation fuel selling facilities at 31 airports for another Rs 7,000 crore. [caption id=“attachment_4572901” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The twin deals along with deleveraging of telecom arm Jio’s infrastructure assets will help Reliance become “a zero-net debt company within the next 18 months, that is by 31 March, 2021”, Ambani said at the company’s annual general meeting (AGM) in Mumbai. Reliance as a whole has an enterprise value of about $134 billion, including telecom and retail businesses. The company, which had a net debt of Rs 1,54,478 crore as on 31 March, 2019, also intends to list its retail and telecommunication units within five years, he said. A zero-net debt company would mean that borrowings fall below cash reserves with the firm, a level Reliance hasn’t seen since 2013. It had an outstanding debt of Rs 2,88,243 crore as on 30 June, 2019, and a cash balance of Rs 1,31,710 crore as on 30 June. Reliance has invested Rs 5.4 lakh crore, mostly in debt, in the last five years in the expansion of its oil to chemicals business, creating 4G wireless telecom network that offers high-speed internet and in setting up India’s largest retail chain. The debt levels had raised concerns among analysts including at Credit Suisse Group AG which felt the ballooning borrowings would weigh on growth. With PTI inputs (Disclosure - Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd)