Reliance Industries slips 4% on cancellation of Saudi Aramco deal
With today’s intra-day fall, the stock of RIL has fallen 14 per cent from its record high of Rs 2,750 on October 19, 2021. at 09:54 am; It was trading 3 per cent lower than the 0.56 per cent fall in the S&P BSE Sensex.
In August 2019, RIL and Saudi Aramco signed a non-binding letter of intent for a possible 20 per cent stake acquisition by Saudi Aramco in Reliance’s O2C business. In the last two years, both the teams put in significant efforts in the process of due diligence, despite the COVID restrictions.
Reliance recently unveiled its plans for new energy and materials businesses by announcing the development of the Dhirubhai Ambani Green Energy Giga Complex in Jamnagar, which houses a major chunk of O2C assets. It will be one of the largest integrated renewable energy manufacturing facilities in the world.
Due to the evolving nature of Reliance’s business portfolio, Reliance and Saudi Aramco have mutually determined that it would be beneficial for both parties to reevaluate the proposed investment in the O2C business in light of the changed context. Consequently, the present application with the NCLT for separation of O2C business from RIL is being withdrawn, RIL said in a statement.
According to ICICI Securities, there is a delay in the O2C stake sale and subsequent value unlocking, which would further strengthen RIL’s balance sheet. “We await further clarity on the stake sale timeline. However, O2C business prospects have improved due to increase in GRMs and fuel demand after the second wave of COVID-19. It is expected to report stable profitability in the near term, the brokerage firm said in a note.
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