InvestorQ : Why has Reliance moved up in the last few days, is it because of hiving off the O2C business?
Anamika Sodhani made post

Why has Reliance moved up in the last few days, is it because of hiving off the O2C business?

Angel dcosta answered.
1 year ago

As we speak, the stock of Reliance Industries has scaled to a four-month high on 25 February. The stock had been under a good deal of pressure in the last few months after the good news about its capital raising was already factored in. The big challenge was how will the company now use its cash surpluses and put it to productive use.

One thing that has been positive about the RIL stock in the last few days has bene the progress on hiving off the oil to chemicals business into Reliance O2C limited. This is an old plan that was first announced about 2 years back when the Saudi Aramco deal was first announced but has secured the SEBI approval and has been actioned only now.

This hiving off news has resulted in good price performance for Reliance Industries in the recent past. In fact, RIL was quoting at around Rs.2,150 on Thursday 25 February, a sharp spike from levels of nearly Rs.1850 just a few days back. The stock is currently trading at a 4-month high on the stock exchanges.

With the approval of the stock exchanges and SEBI already secured, RIL plans to complete the entire process of hiving off the O2C business by Jun-21 at the very latest. Under the terms of the hiving off, the refining and petrochemicals businesses of RIL will go into Reliance O2C to in order to enable holistic and quick decision making.

There are still other steps left. For example, RIL still needs take the approval of equity shareholders and creditors as well as the Mumbai and Ahmedabad benches of the NCLT. This is seen as the first step to hive off a stake in the O2C business to potential investors. That did not work out initially with Saudi Aramco. Apart from monetisation, this move will also accelerate Reliance’s new and green energy and material plans for the future.