Shares of Reliance Industries settled jumped well over 6 percent on Thursday, a day after the conglomerate announced that its board has decided to implement a Scheme of Arrangement (Scheme) to transfer Gasification Undertaking into a wholly-owned subsidiary (WOS).
"The Gasification project at Jamnagar was set up with the objective to produce syngas to meet the energy requirements as refinery off-gases, which earlier served as fuel, were repurposed into feedstock for the Refinery Off Gas Cracker (ROGC). This enables production of olefins at competitive capital and operating costs. Syngas as a fuel ensures reliability of supply and helps reduce volatility in the energy costs. Syngas is also used to produce Hydrogen for consumption in the Jamnagar refinery," RIL said in a regulatory filing.
"Repurposing the Gasification assets will help use syngas as a reliable source of feedstock to produce these chemicals and cater to growing domestic demand, resulting in an attractive business opportunity," the statement read.According to the company, as the hydrogen economy expands, RIL will be well positioned to be the first mover to establish a hydrogen ecosystem.The Scheme will also enable RIL to evaluate unlocking the value of syngas, with a collaborative and asset-light approach involving induction of investor(s) in the gasifier subsidiary and capturing value of upgradation in RIL through partnerships in different chemical streams, the company said.The appointed date of the Scheme is March 31, 2022.
Speaking on CNBC-TV18, Centrum Broking's Probal Sen said, “We currently have a target valuation of around Rs 2,565 with the ‘hold’ kind of rating. The green energy initiatives, we value at about 2.50 times, EV to capital employed, which delivers about Rs 290 a share EV. In the O2C segment, we have always valued at a slightly lower number than the $75 billion EV that was floating around. Our target valuation provides an EV of around 63 billion, which translates to I think around Rs 750 a share.”
RIL's share price closed Thursday's trade quoting at Rs 2,501 apiece, up 6.36 percent, on NSE. The stock opened at Rs 2,373 and hit the day's high at Rs 2,502. After today's surge, the RIL stock has surged over 27 percent in the past six months.
Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.Note: The story has been updated with RIL share closing price(Edited by : Ajay Vaishnav)
First Published: IST
Reliance Industries shares jump over 6%; here's why - CNBCTV18
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