Reliance Industries shares outperform Sensex, rise 59.32% from March 23 low

RIL shares, which closed at Rs 883.85 on March 23, has zoomed 59.32 per cent since then to Rs 1,408.15 by Tuesday in the midst of the coronavirus pandemic while the Sensex has risen only 16.67 per cent in the same period — from 25,880.83 on March 23 to 30,196.17 on Tuesday.

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Shares of Reliance Industries (RIL), which is opening its Rs 53,125-crore rights issue on Wednesday, declined 2.26 per cent on the stock exchanges on Tuesday, even as the Sensex rose 167 points to 30,196.17.

However, RIL shares, which closed at Rs 883.85 on March 23, has zoomed 59.32 per cent since then to Rs 1,408.15 by Tuesday in the midst of the coronavirus pandemic while the Sensex has risen only 16.67 per cent in the same period — from 25,880.83 on March 23 to 30,196.17 on Tuesday.

A week ago, RIL share prices inched closer to its all-time high value of Rs 1,617 hit in December 2019, as it surged to an intra-day high of Rs 1,614 even as the market was battered by the lockdown and the economic slowdown triggered by COVID-19. The sharp rise of 59 per cent in the share prices of RIL from March 23 comes amidst a volatile market condition triggered by the coronovirus pandemic. The rise is despite a decline in crude oil prices and demand for refined products hit RIL’s bottom line and it reported a 37.2 per cent fall in net profit for the March quarter.

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Analysts said Jio Platforms, RIL’s subsidiary, has now raised over Rs 67,000 crore over the last one month at a time when lockdown and the slowdown have led to massive job losses and factory closures while the services sector has come to a standstill. The fund raising of Rs 110,000 crore (rights issue plus Jio Platform stake sale) will significantly increase the company’s ability to reduce its debt at a time when most corporate have gone for three months moratorium on loan repayments and thousands of MSMEs have closed down operations.

According to Motilal Oswal Institutional Securities, with the latest deal (General Atlantic), Jio Platforms has turned virtually debt free. “Its current net debt now stands at Rs 2800 crore from net debt of Rs 140,000 crore in FY19 and peak net debt of Rs 217,000 crore before formation of the InvIT structure,” it said.

Significantly, many big corporates had benefited from the RBI’s liquidity infusion move this year. The RBI has also admitted it and said small and medium units were hit severely by the Covid disruptions. “It is observed that the deployment of TLTRO funds so far has largely been to bonds issued by public sector entities and large corporates, especially in primary issuances. The disruptions caused by COVID-19 have, however, more severely impacted small and mid-sized corporates, including NBFCs and MFIs, in terms of access to liquidity,” RBI Governor Shaktikanta said on April 17.