Indian Economy & Investments in RIL’s Jio
Though it’s no doubt that, with China being devasted with COVID impact, foreign companies are looking at India as a new hub, these investments might not be the exact indicators. Since long, RIL has been trying to reduce its debt. With the delay or a potential call-off Saudi Aramco deal, these investments seem to be a hedge to their debt-free plan. In less than one month, with 3 major investments, the conglomerate is believed to have reduced its debt by 40%. These invests set the Jio enterprise value at whooping 5.15 Lakh Crore with %stakes at (RIL – 86.54%, Facebook – 9.99%, Vitsa – 232%, Silver Lake – 1.15%).
Though it might be the faith in the Indian economy, it looks more like RIL trailer plan to launch its big game –
RIL RIGHTS ISSUE
What is RIL Right Issue
After the March market crash, RIL has recovered rapidly – mainly driven by the major investment in Jio. It is believed that RIL can potentially open the Right Issue on 22nd May. If all goes well below may be the structure of the issue –
If the right issue was in pipeline, the causation between recent investments and mindset to inflate stock price seems possible.
Along with all these dynamics, it is no doubt that RIL is run by great minds and its Jio platform has great potential. This right issue for sure would be a great potential for current RIL shareholders. But for those who don’t own the share, with current spiked valuation – Recent sharp V shaped recovery increase, the investment in RIL at this stage might not be attractive
It is no doubt that RIL is going beyond reach to complete its promise of making RIL debt free. Thus, all these multiple investments are just the formulary to build on biggest right issue in Indian history.