KOLKATA: Today, Facebook announced that it is investing ₹43,574 Crore in Mukesh Ambani-owned Jio, the largest telecom operator in India, for a 9.99% equity stake. Now, this deal is being endorsed by major global brokerages for the multiple merits, it will show.
This deal has put Jio Platforms, Jio’s parent company at a pre-money valuation of ₹4.62 Lakh Crore. It will also help Reliance Industry Limited (RIL), shrink its debts further while allowing the Zuckerberg-led Social media titan to gain a stronger foothold in the 2nd largest internet market in the world.
Citigroup is maintaining a “buy” rating, for RIL stocks, at ₹1530 per share. In a note, they stated,”This is a positive not just for the higher implied valuation for Jio that it helps cement, especially in the context of the current environment, but also for potential upside in valuations of Reliance Retail.”
Citigroup analysts have also added,”RIL is also our top largecap pick in the sector. Despite the refining business facing headwinds, we expect RIL’s consolidated Ebitda to grow at an 18% CAGR over FY20-22E”. Furthermore, they pointed out that RIL is still a big underweight because of foreign institutional investments (FIIs) and domestic mutual funds.
RIL’s net debt has stood around ₹1.53 Lakh Crore, as of 31st December, 2019. Now, Credit Suisse has said, in a note that with this Facebook deal in place, the company is predicted as, on course, to be net debt-free by March 2021. However, Credit Suisse is still maintaining a “neutral” rating, for RIL stocks.
Sanford Bernstein stated, “The Facebook investment removes balance sheet risks and adds considerable optionality to retail, digital and internet business segments. We expect a positive reaction to this announcement.” They have upped their RIL stock rating to “outperform”, with a target price of ₹1,530.
UBS predicted that potential partnerships, like this and stake sales along with reduced capex would help RIL moving on the path to nil debt. They have maintained a “Buy” rating with a price of ₹1,715.