Jio’s focus on monetisation with recent tariff hike and completion of 5G rollout has been leading the growth engine for the conglomerate.
“Jio’s growth is driven by its expanding 5G user base, increasing data consumption, and tariff hikes. RIL is currently trading at a P/E multiple of around 30, while its telecom sector peer, Bharti Airtel, is trading at a P/E multiple of over 70. This disparity indicates a significant value creation opportunity if a public issue occurs,” said Amar Nandu, Research Analyst, SAMCO Securities.
The investors now also expect the energy and retail segment to get listed soon.
“Reliance Retail Ventures Limited is also showing robust growth, driven by storeexpansion and a revenue surge (30% of RIL consolidated revenue in FY2024). An IPO announcement for Reliance Retail could further enhance the company’s valuation,” added Nandu.In the 47th annual general meeting of RIL, the investors will watch out for timelines, targets, new partnerships and other announcements regarding the conglomerate’s diversified business that sprawls across oil and petrochemicals, telecom, retail, new energy and finance.Nandu believes that there may also be updates regarding the IPO of Jio Platforms Ltd, as the Chairman previously announced in the 2019 AGM that Jio would go public within five years. For FY2024, Jio’s revenue, EBITDA, and PAT represent 12%, 31%, and 27% respectively of the company’s consolidated figures, highlighting its substantial size.
He added that currently, RIL is experiencing a conglomerate discount, meaning the combined value of its business units is higher than the company’s overall market valuation. To unlock this value, the company may announce separate listings for its business units soon, which could enhance shareholder wealth.
Last year, the AGM announced a meticulous five-year succession plan for the three children of Mukesh Ambani, a major milestone for India’s most valuable company.
RIL has a history of making significant growth-related announcements at its AGMs, and similar updates are likely this year.
Amar Nandu believes that given the potential for positive, growth-focused announcements at the AGM, it could be advantageous to consider buying the company’s shares tomorrow during early market hours.
RIL share price performance
In the last one year, the shares of Reliance Industries have gained 22.65% while in the current calendar year, the stock has increased by 15.7%. The shares have increased by 3% in the last 6 months.
RIL shares history on AGM day
In the last 10 years, RIL shares have ended in the red on AGM day on a majority of 6 times.
The worst AGM day for RIL investors in the past decade was in 2020, during the Covid-19 pandemic, when the stock dropped 3.71% to Rs 1,845.60. The decline was driven by profit-taking after announcements like the Rs 33,737 crore Google deal and plans for Make-in-India 5G offerings.
The best AGM day was in 2019 when the stock surged 9.72% to Rs 1,262.98. Investors responded positively to the announcement of Saudi Aramco’s 20% investment in RIL’s oil-to-chemical business (which was later called off) and Reliance’s plan to become a zero-debt company.
How to trade RIL ahead of its AGM today?
Sahaj Agrawal, Senior Vice President: Head of Derivatives Research, Kotak Securities
“Reliance Trades with a positive bias from the medium term perspective. Trend support for the stock is placed at 2690 levels with buying on dips advisable,” says Sahaj Agrawal.
On the higher side resistance is placed at 3200-3300 levels.
“A Collar strategy gives downside protection while allowing participation on the upside when the trend of the underlying remains positive. Protection below the 3000 mark with participation up to 3200 levels looks apt In the current setup,” Agrawal added.
Below are the advised strikes for the strategy:
ETMarkets.com(Source: Kotak Securities)
Ajit Mishra, SVP of Research at Religare Broking
Reliance has been trading within a range after retesting the support zone at the 2850 level, with signs pointing towards further consolidation.
“Traders should consider options strategies with a bullish bias ahead of its AGM, such as a bull call spread,” says Ajit Mishra.
Buy: 3000 call option
Sell: 3100 call option
The strike prices have been identified given the immediate support at 2950.
“We may see new momentum in the stock once it decisively breaks above the 3050 level,” Mishra added.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)