by admin | May 25, 2021 | Business, Large Enterprise
Mumbai : Retaining its “buy” recommendation on the Reliance Industries (RIL) stock, global brokerage firm CLSA on Wednesday said RIL is likely to turn cash flow-positive this fiscal by reaping benefits of its downstream expansion and expects the company to monetise its Jio telecom network.
During 2017-18, the Mukesh Ambani-led RIL was expected to end a four-year run of negative cash flows and report a consolidated free cash flow of nearly $1 billion, according to the Hong Kong-headquartered CLSA.
“This year will see a big cash-flow boost as projects of over $40 billion start to deliver in full swing while capex falls.
“Stabilisation of ROGC (refinery off-gas cracker) and petcoke gasification would boost Ebitda (earning before interest, taxes, depreciation and amortisation),” said the CLSA research report.
On Tuesday, RIL announced the successful commissioning of the world’s largest 1.5 million tonne per annum (MTPA)-capacity ROGC complex at Jamnagar in Gujarat along with downstream plants and utilities.
According to the brokerage, monetisation of the ROGC complex, coupled with the petcoke gasification plant, which is in an advanced stage of commissioning, will boost the Ebitda, or operating income, of the company.
However, RIL “should allow almost a full year of benefit to flow in fiscal 2018-19. Stabilisation of these projects would give a big boost to oil and gas earnings over 12-15 months”, the report said.
Noting that RIL’s telecom network Jio’s monetisation plan entails raising smartphone Arpus, and expanding 4G feature phone subscribers, along with the launch of its broadband and enterprise offering, CLSA said: “We will also start to see cross-selling and other ways to monetise Reliance’s wide customer base, which will be the key long-term value driver.”
Focusing on its telecom venture in 2017, RIL managed to gather nearly 15 crore subscribers on the back of cheap plans and high capacity data network, while CLSA now expects the company to monetise not only Reliance Jio Infocomm customers but also its “industry leading capacities”.
RIL’s telecom venture can monetise its customer base by cross-selling retail products, CLSA said.
“While we also expect a notable decline in capex intensity through 2018, at the same time, successful launch of broadband and enterprise businesses could further add to estimates,” it added.
—IANS
by admin | May 25, 2021 | Business, Corporate, Corporate finance, Large Enterprise
Mumbai : Reliance Industries Ltd (RIL) on Tuesday said it has raised $800 million by selling 10-year bonds in the first offering since Moody’s last week raised India’s sovereign rating after 14 years.
According to a Mukesh Ambani-led RIL release here, the bonds, priced at 3.66 per cent, were the lowest coupon ever achieved by an Indian corporate for a 10-year issuance, the company.
“The notes have been priced at 130 basis points over the 10-year US Treasury Note, at a price of 100 to yield at 3.667 per cent,” it said.
They “will bear fixed interest of 3.66 per cent per annum, with interest payable semi-annually in arrears and shall rank pari passu with all other unsecured and unsubordinated obligations of the company,” it added.
RIL will use the proceeds to refinance existing debt. India’s largest company has a debt of around $12 billion (Rs 75,000 crore) on its books, a major portion of which will mature next year.
“The company will use the proceeds to redeem its existing $800 million 5.875 per cent senior perpetual fixed rate unsecured notes pursuant to the terms of such notes,” it said.
The notes were oversubscribed more than 1.6 times across 90 accounts.
The statement said this was the tightest ever spread over US Treasury for an Indian entity for a 10-year issuance, as also the tightest ever spread over US Treasury for a 10-year BBB corporate issuance from Asia minus Japan since the global financial crisis.
Issued against the backdrop of the upgrade of the country ratings by Moody’s, RIL successfully concluded a swift intra-day execution to capitalise on the market window, according to Joint Chief Financial Officer V. Srikanth.
“This refinancing transaction was well received by high-quality investors across asset managers, insurance companies, and banks and helped us achieve substantial savings in interest cost over the life of the notes,” he said.
With the RIL rated at par with the sovereign rating, following the upgrade by Moody’s of India’s ranking, RIL too has been assigned a ‘Baa2’ grade.
Last week, US credit rating agency Moody Investor Service upgraded India’s sovereign ratings to ‘Baa2’ from its lowest investment grade of ‘Baa3’ and changed the outlook for the country’s rating to ‘stable’ from ‘positive’.
It said this was based on the Indian government’s “wide-ranging programme of economic and institutional reforms”.
On the rationale for RIL’s ‘Baa2’ rating, Moody’s said that it reflects the company’s strong ability to generate operating cash flows, with Ebidta, or operating income, exceeding $10 billion from its integrated refining and petrochemical operations, as well from its new digital services business.
—IANS
