RIL Hits a New High in the Stock Market

On 7th July 2017, Mukesh Ambani owned Reliance Industries Limited’s (RIL’s) stock price rose by 4 percent in intraday trade. This helped it hit a nine-year high in terms of stock performance at INR 1,497.

RIL’s performance in the stock market

RIL’s stock has risen by 39 percent since the beginning of 2017. It ended the session at INR 1,490.80. Between the years 2008 and 2016, RIL’s stock dropped by more than 25 percent. At the same time, the Sensex grew by 31 percent.

Daljeet S. Kohli, the Head of Research at IndiaNivesh expects positive earnings for RIL in Financial Year (FY) 2018 as its large core projects get commissioned. This rise is attributed to its news of consolidation in the telecom industry, the upcoming launch of RIL’s new 4G feature phone, and its petrochemical and refining expansion plans.

Consolidation in the telecom industry

Analysts claim that the telecom consolidation will give RIL better pricing power. Paras Bothra, the Head of Research, Ashika Stock Broking said that the consolidation would result in better operational synergies in terms of reducing costs of network expansion, spectrum, and marketing. With the presence of more than ten players in the telecom market, the telecom companies are facing a strain on their revenues due to the competition.

Launch of RIL’s feature phone

RIL is about to launch a new feature phone. This phone will be launched at RIL’s forthcoming annual general body meeting to be held on 21st July 2017. This phone will support 4G VoLTE and will be available at a price of INR 500.

RIL’s petrochemical industry

Last month RIL and BP announced a project of USD 6 billion to increase the production in the KG basin field. The effects of this move are expected to be seen in RIL’s financial performance in the years 2019-2020.

On 11th July 2017, the Government of India gave RIL a green signal to expand its petrochemical complex in Gujarat. This complex consists of feeding downstream petrochemical, naphtha crackers, fiber intermediates, as well as polyester plants. RIL’s proposal was to increase the production capacity of these plants through expansion, debottlenecking, and technological upgradation. Apart from Gujarat, the company also has plants in Maharashtra, Uttar Pradesh, Punjab, and Dadra and Nagar Haveli.

Conditions by the Environment Ministry

On giving its approval, the Environment Ministry has asked RIL to comply with some conditions, which include:

  • Strengthening the existing green belt by 20 hectares.
  • Earmarking 2.5 percent of the INR 2,100 crore project to enterprise social responsibility.
  • Adhering to the stipulations made by the State Government of Gujarat, the Gujarat State Pollution Control Board and other statutory authorities.

Time taken for project completion

As per its proposal, Mukesh Ambani’s RIL has stated that it would complete the debottlenecking of some of its plants in a phased manner in two years. This debottlenecking would start once the company receives the environment clearance (EC) from the Environment Ministry. For setting up of new plants, it is expected that the company would take around three to five years for completion.

Summary

On 7th July 2017, Reliance Industries Limited (RIL) hit a new high with its stock performance reaching INR 1,497, a nine-year high since 2008.

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