RIL shares company, Just Dial holds 5%; JP Morgan sees limited rise in RIL on spending on new digital initiatives
Reliance Industries Ltd (RIL) stock price rose half a percent to Rs 2,124 a piece on BSE, while Just Dial shares fell more than 5% to Rs 1,016.86 a piece on Monday. . Last week, Reliance Retail Ventures (RRVL) announced its intention to acquire a controlling 66.95% stake in Just Dial. JP Morgan Equity Research has assigned a neutral rating to RIL following the announcement of the acquisition. The brokerage company sees only a 6.5% increase in RIL stock by March 2022. It has set a target price of Rs 2,250 per share.
Reliance Retail has signed an agreement to acquire 40.95% of Just Dial for Rs 3,497 crore and will subsequently make an open offer to acquire an additional 2.17 crore of shares of the engine platform of research representing 26% in accordance with the takeover regulations. “We would wait to see how the acquisition would expand JioMart’s footprint and whether Just Dial Mart is ultimately integrated with the JioMart app, thus putting in place the building blocks of a ‘super app’,” analysts at JioMart said. JP Morgan. He also believes that the acquisition of several digital properties strengthens RRVL’s online commerce / payment presence.
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The main downside risks to its “neutral” rating and price target include the impact of significant spending on new digital initiatives. While the upside risks include a stronger than expected recovery in the core business and larger than expected telecom price hikes. Earlier last week, the Just Dial share price hit a new 52-week high at Rs 1,138 each. The Just Dial share price has climbed 65% so far this year, compared to a 13% increase in the Nifty 50 index.
RIL’s share price is up 16% from its 52-week low of Rs 1,830 a piece, hit in January of this year. So far, almost 14 lakh stocks have traded on BSE, while a total of 21.29 lakh stocks have traded hands on NSE. Analysts at the research firm believe that rising oil prices, expectations of a recovery in refining margins and the rise of Jio Mart should continue to support the stock. Gradually, larger increases in telecommunications tariffs would be seen as positive, he added.
Over the past three years, Reliance Industries of Mukesh Ambani has made several acquisitions in digital properties including NetMeds, Urban Ladder and Zivame. Analysts believe the main attraction for RRVL would be access to Just Dial’s merchant / retailer listing database and the ability to extend the JD application and JD Mart platforms and add to Jio Mart application and extend the reach of services and offerings across B2B and B2C.