homemarket NewsJP Morgan stays 'overweight' on RIL, expects 12% upside; values Reliance Retail at $112 bn

JP Morgan stays 'overweight' on RIL, expects 12% upside; values Reliance Retail at $112 bn

Reliance Retail, a subsidiary of Mukesh Ambani-led Reliance Industries Ltd, has been valued at an enterprise value (ev) of $112 billion and implied equity value would be $102 billion, JP Morgan said in its report.

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By Meghna Sen  Jul 10, 2023 9:33:06 AM IST (Updated)

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JP Morgan stays 'overweight' on RIL, expects 12% upside; values Reliance Retail at $112 bn
Global research and broking firm JP Morgan maintained its 'Overweight' stance on the stock of Reliance Industries (RIL), with a target price of Rs 2,960 per share, suggesting an upside of 12 percent from the current market levels. RIL shares opened at Rs 2,706.25, up 2.76 percent on the NSE in Monday's trade. The stock has gained 9 percent in the last one month, while it has risen nearly 12 percent in the last one year.

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JP Morgan, in its report, said that Reliance Retail — a subsidiary of Mukesh Ambani-led Reliance Industries Ltd — has been valued at an enterprise value (ev) of $112 billion and implied equity value would be $102 billion.
Global brokerage Bernstein has pegged the enterprise valuation RIL's stake in Reliance Retail at $111 billion.
Reliance Retail on Friday said it will reduce the equity share capital to the extent held by shareholders other than its promoter and holding company. The board of Reliance Retail, on July 4, approved the proposal in which shares held by such shareholders shall stand cancelled and extinguished as per the capital reduction plan.
"A consideration of Rs 1,362 per share, determined on the basis of valuation obtained from two reputed independent registered valuers, shall be paid towards the capital reduction," according to an exchange filing by its parent firm RIL.
Upon such reduction, these shares held by such shareholders shall stand canceled and extinguished and a consideration of Rs 1,362 per share shall be paid to shareholders towards the capital reduction.
The payout, RIL said, has been determined on the basis of valuation obtained from two reputed independent registered valuers.
Presently Reliance Retail's equity shares are not listed, hence the valuation was determined by two independent registered valuers appointed by the company -- Ernst & Young Merchant Banking Services and BDO Valuation Advisory LLP.
Ernst & Young had valued Rs 884.03 per share, while BDO Valuation Advisory LLP has put the price of Rs 849.08 per share.
Reliance Retail has been valued at $92-96 billion by two global consultants appointed by the company, according to a report on Friday. Reliance had appointed independent valuers EY, which valued the company at $96.14 billion, while BDO valued it at around $92 billion, a source with direct knowledge of the matter told Reuters.
The retail arm of RIL will also buy back shares trading in the gray market and given to employees as stock options as the oil-to-telecom conglomerate mulls listing the holding company of Reliance Retail.
This capital reduction plan will make Reliance Retail a 100 percent subsidiary of Reliance Retail Ventures Limited (RRVL) and through this, it will be able to more efficiently structure businesses.
RRVL, the promoter and the holding company of Reliance Retail, holds 99.91 percent of the share capital of the company. While 0.09 percent, around 78.65 lakh equity shares, are held by the identified shareholders.
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Disclosure: Reliance Industries Ltd, which owns Jio, is the sole beneficiary of Independent Media Trust that controls Network18, the parent company of CNBCTV18.com.

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