Reliance Industries shares fall 4% on calling-off Saudi Aramco deal
- RIL shares fell more than 4% on Monday
- RIL's stock has dropped 14% from its all-time high of Rs 2,750
- RIL called off a deal with Saudi Aramco to sell a 20% stake in the oil-to-chemicals (O2C) business
Reliance Industries shares were down more than 4% at Rs 2,368.20 on the BSE after the company called off a deal with global oil giant Saudi Aramco to sell a 20% stake in the oil-to-chemicals (O2C) business. RIL made an announcement after market hours on Friday.
With today's fall, RIL's stock has dropped 14% from its all-time high of Rs 2,750 on October 19, 2021. At 09:54 a.m., it was down 3%, against a 0.56% decline in the S&P BSE Sensex.
In August 2019, RIL and Saudi Aramco signed a non-binding letter of intent for Saudi Aramco to acquire a 20% stake in Reliance's O2C business. Despite Covid's constraints, both parties put in tremendous effort in the due diligence process over the last two years.
Reliance recently announced its intentions for the new energy & materials businesses, including the development of the Dhirubhai Ambani Green Energy Giga Complex in Jamnagar, which accounts for a significant portion of the O2C assets. It will be one of the world's largest integrated renewable energy manufacturing facilities.
Reliance and Saudi Aramco have mutually concluded that it would be desirable for both parties to re-evaluate the proposed investment in the O2C business in light of the shifting nature of Reliance's business portfolio. As a result, RIL's existing application with NCLT to separate the O2C business is being abandoned, the company stated in a statement.
According to ICICI Securities, the sale of O2C stakes and consequent value unlocking, which would have further bolstered RIL's balance sheet, has been postponed. "We are waiting for further information on the dates for the stake sale." The prospects for the O2C business have improved as a result of an increase in GRMs and fuel consumption following the second wave of Covid-19. In the near term, it is projected to post consistent profitability," the brokerage firm said in a note.