Reliance Industries (RIL) corrected by about Rs. 200 in last couple of weeks, which contributed to Nifty to correct by about 175 points in this period (taking present weight of RIL in Nifty at around 14%). Nifty was unchanged at 11,950, at opening and closing range of these 2 weeks.
RIL under-performance is due to huge Hedge Fund selling in this period, due to fear of consolidated dull Q2 numbers on 30-10-20. Dull numbers are feared from Refinery and Retail Verticals, while international arbitration interim Award initiated, in Future Group asset acquisition, has put a stay on this acquisition, is also seen a double whammy.
Sum of Part (SOTP) valuation of RIL is now capturing Holding Company Premium, instead of Holding Company Discount. Present M Cap of Rs. 15.20L crore (Rs. 14.28 lakh cr, fully paid up share, 0.52L cr for PP share and 0.40L Cr for Unpaid calls) is giving over 8% premium. Each vertical, of O2C, Jio Platform (RIL holds 67% stake) and Retail is valued at Rs. 4.20L cr. With cash equivalent and other business, including Media, being valued at Rs. 1.40 L cr., giving an EV of Rs. 14L cr. For RIL
Even in Q1 FY21, RIL had consolidated PBT of Rs. 8.542 cr. against Rs. 14,366 cr. YoY, and Rs. 13,490 cr. QoQ. If Hedge Funds keep shifting to other stocks from RIL, (as seen having moved in HDFC Twins in last 2 weeks) alarm bell may still be seen ringing for RIL.