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RIL jumps 5% on Rs 25,000 crore NCD announcement, erases gains later

The company did not give the purpose of the fundraising.

ETMarkets.com|
Last Updated: Apr 03, 2020, 03.52 PM IST
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Reuters
RIL-1---Reuters
Motilal Oswal Securities said that given the current shutdown of retail stores (except grocery), Reliance Retail could see 4-5 per cent revenue loss.
NEW DELHI: Shares of Reliance Industries jumped 5 per cent in Friday's trade after the company board approved a proposal to raise non-convertible debentures (NCDs) worth up to Rs 25,000 crore in tranches. The stock, however, erased entire gains as the session progressed.

At 9.35 am, the scrip traded 0.12 per cent lower at Rs 1,079.40, after rising 4.71 per cent higher to Rs 1,131.60 in early trade. The company did not give the purpose of the fundraising.

Motilal Oswal Securities said that given the current shutdown of retail stores (except grocery), Reliance Retail could see 4-5 per cent revenue loss.

"RJio should see limited impact as drop in new subscriber addition/physical recharges would get offset by an increase in data consumption. For the core business, we have revised down refinery throughput and petrochemical sales to factor in the COVID-19 lockdown," it said.

That said, the brokerage said RIL is its best pick from oil & gas sector.

On Friday, oil prices fell, coming off their biggest one-day gains in the previous session after US President Donald Trump said he had brokered a deal between Saudi Arabia and Russia to cut output, but made no offer to reduce U.S. production. Brent crude futures fell 3 per cent, or 9 cents, to $29.05, after having soared 21 per cent on Thursday.

"Our 25 per cent target price cut is driven by both earnings cut and reduction in blended EV/Ebitda multiple by 1 time. RIL’s outlook is also dependent on deals like fibre InvIT, Aramco and Jio; hence, restoration of normalcy from Covid-19 is the key trigger and the stock should outperform indices then.," said EMkay Global, which has a buy rating on the stock.

The shares of the company closed 0.23 per cent down at Rs 1078.20 on BSE.

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