Reliance AGM 2021 analysis: Should you buy RIL shares post-AGM? Here’s what analysts have to say

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Investors on Dalal Street preferred to book profits in Reliance Industries on the day of its 44th Annual General Meeting. As a result, shares of the oil-to-telecom behemoth settled 2.35% down at Rs 2153.35, while the benchmark BSE Sensex settled 392.92 points, or 0.75%, higher at 52,699. Earlier, the scrip had gained more than 2% this month till June 23.

Why did RIL slip?

Market analysts believe that capital expenditure plans over the next three years put pressure on the stock. Sanjiv Bhasin, Director, IIFL Securities said, “Capex plans of Rs 75,000 crore announced by the company are very ambitious and it has left a little bit of sour taste in the mouth of investors. However, these projects are the need of the hour and it will take a little bit time to digest.”

His views came after Mukesh Ambani, Chairman, Reliance Industries, said the company will invest over Rs 60,000 crore in the next three years on four Giga factories. Ambani also announced to invest an additional Rs 15,000 crore in the value chain, partnerships and future technologies, including upstream and downstream industries.

Other major announcements

In the 44th AGM, Ambani announced to launch of a truly transformational clean energy ecosystem which will “transform India from a major importer of fossil fuels to an exporter of clean energy.” Commenting on the announcement, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “Rs 75,000 cr investment in the next 3 years in 4 Giga factories will mark a seismic shift in India’s clean energy pursuit. The affirmation that RIL will make clean energy a truly global business is good news not only for the planet but for shareholders too.”

The company also announced an ultra-affordable smartphone jointly developed by RIL and Google which is to be launched in September.

“RIL’s plan to substantially scale up clean energy and digital technology has the potential to transform RIL into a leading global company in sync with a sustainable planet,” said Vijayakumar.

Should you invest?

While advising investors and shareholders, Bhasin said: “Investors can buy the stock on dips as the progress of Jio, retail and the new capex got long term implications. For the first time, any Indian company has got investors like Saudi Aramco on board. This sounds very optimistic. Reliance is going to be the first Indian international firm.”

Gaurav Dua, senior VP and head – capital market strategy, Sharekhan by BNP Paribas said, “Biggest takeaway from RIL AGM include reassurance on Aramco coming on-board with a strategic stake in O2C business and a beginning of a new investment cycle with an allocation of Rs 75000 crore in the green energy space. The growth plans in Jio and retail businesses seem to be on track. Though the announcements are encouraging they seem to have fallen short of heighten expectations. There is no clarity on the valuation for the Aramco deal. Nor the speech had timelines for the listing of Jio and retail businesses. Overall, we retain our Buy rating on RIL and it is among our preferred pick among large-cap companies.”