Reliance Industries could raise a maximum of $13.8 billion through the proposed rights issue if it issues fresh shares to the tune of 12 per cent at a discount of 5 per cent from the current market price, guesstimated Morgan Stanley. At a current $/rupee value, it could be around ₹1.05-lakh crore.

Reliance Industries on Monday said that its board will meet on April 30 (Thursday) to consider a proposal to issue equity shares to existing shareholders on rights basis. The board will also approve its standalone and consolidated audited financial results for the quarter and year ended March 31, 2020, and recommend dividend on equity shares of the company.

If it issues just 2 per cent shares, at a discount of 5 per cent, then the company could raise $2.3 billion (₹17,600 crore), the global investment advisor said in a note. If RIL issues shares at a discount of 20 per cent and offers 2 per cent fresh equity, then India’s top market-cap company could raise only $1.9 billion (₹14,500 crore).

However, if it issues 12 per cent fresh shares at a discount of 20 per cent from the current price, it could raise $11.6 billion (₹88,500 crore), Morgan Stanley, which analysed various scenarios of fund-raising in the rights issue by RIL, said.

According to its broad analysis, RIL could raise as low as $1.9 billion or ₹14,500 crore (2 per cent fresh shares at 20 per cent discount to the CMP), to a maximum of $13.8 billion or ₹1.05-lakh crore.

The company’s debt and liabilities would decline by 4.7 per cent to 33.6 per cent, Morgan Stanley said. Similarly, the fund-raising could result in an EPS accretion of 0.1 per cent to a maximum of 2.6 per cent, it further said.

According to Morgan Stanley, RIL had three options to lower debt: via selling equity stakes in key businesses, slowing down investments and repaying debt via FCF generation, and raising equity at RIL’s parent level.

“While RIL had used the first two options with the 10 per cent stake in a digital platform’s entity to Facebook for $5.7 billion and also lowered its capex intensity in the past two quarters, we see now the third option in the works,” it added.

RIL’s CDS spread also has declined by nearly 60 bps from the peak in mid-March, though still elevated compared to pre-Covid-19 levels, Morgan Stanley, which retained the ‘overweight’ stance on RIL, with a price target of ₹1,544, said.

Meanwhile, market experts believe that RIL could be raising in the range of ₹50,000-55,000 crore by diluting about 6 per cent stake at a discount of around 20 per cent to the CMP.

RIL shares are currently hovering at around ₹1,435, after dipping to ₹1,392 in early trade on Tuesday on the NSE. The stock on Monday closed at ₹1,429.75.

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