Reliance Industries share surged almost 1% on O2C business demerger:
Reliance Industries: It is one of the largest multinational conglomerate companies in India located in Mumbai. The company provides services in petrochemicals, textiles, natural gas, media, and telecommunication across India. It is the first Indian company to reach $200 billion in market capitalization. The present Chairman and Managing Director (MD) of the company are Mukesh Ambani.
Meanwhile, on Tuesday, February 23rd, the shares of the company surged almost 1% in the stock market. The main reason for this is the company initiated the process of demerging its Oil-to-Chemicals (O2C) business into an independent subsidiary.
Besides, the process of reorganization will provide better results to Reliance Industries. After the process of carving out from Reliance Group, the O2C business will be an independent subsidiary of Reliance. However, the company will retain 100% management control of the subsidiary.
Moreover, the decision will provide more support for the strategic partnership and also attracts new investors into the business. After the reorganization, the company will have four sectors that include the Digital, Retail, Materials, and Energy sector.
Commenting on the reorganization, the global research firm Morgan Staley said, the carving out O2C business will provide more valuation to the company. However, the market appreciates the value of the Digital and Retail business of the company.
On the other side, we see significant risk to earnings and multiples for O2C business, as the company invests in new technology. The global research firm maintained an overweight rating on the stock with a target price of Rs. 2,252.00 per equity share.
Reliance O2C Business Report:
Whereas the O2C business will be created as a new subsidiary with the transfer of business, but there will be no changes in earnings and cash flows of the company, said Reliance Industries in an exchange filing.
The risks to the upside include execution on Jiomart, increasing market share, and reduced competitive intensity in the telecom industry, and improvement in core energy margins, said the company in the report.
While the company also mentioned the risks to the downside include a ban on single-use plastic that will reduce margins in the short-term, lower utilization of energy projects that started newly, and delay in the monetization of its energy and telecom asset, it added.
However, the shares of Reliance Industries Limited reported a bullish trend in the stock market on Tuesday. It gained 18.05 points with a 0.90% increase and reached 2,026.15 INR. While in BSE, the company gained 16.85 points with a 0.84% increase and reached 2,024.25 INR.
Stock Market on February 23rd:
On Tuesday, both Sensex and Nifty reported a bullish trend in the stock market after bearish reports in the last five sessions of the market. The Sensex is trading above 49,700 levels and nifty trading above 14,700 levels in the stock market. The Sensex gained 7.09 points with a 0.01% increase and reached 49,751.41 levels. While the nifty gained 32.10 points with a 0.22% increase and reached 14,707.80 levels.
On the other side, the number of coronavirus cases in India on Tuesday, February 23rd reached 1,10,16,434 with almost 1,56,463 deaths.
In the border markets, the S&P BSE SmallCap index reported a bullish trend in the stock market on Tuesday. It gained 144.56 points with a 0.74% increase and reached 19,806.45 levels. But, the S&P BSE MidCap gained 194.35 points with a 0.98% increase and reached a 19,960.58 level. While the Nifty Bank lost 140.25 points with a 0.40% decrease and reached 35,116.95 level.
Top Gainers on February 23rd: Tata Steel, Tata Motors, ONGC, Hindalco Industries, and UPL are the top gainers in today’s stock market.
Top Losers on February 23rd: Kotak Mahindra Bank, Adani Ports, Maruti Suzuki, Bajaj Auto, and Divi’s Labs are the top losers in today’s stock market.