The Reserve Bank of India (RBI) has allowed Reliance Industries (RIL) to retain $2 billion over and above the $3 billion it had raised in the financial year 2022-23 (FY23), reported The Economic Times (ET). The report, quoting sources, further said that Reliance plans to use the money to fund working capital needs and to expand its new energy and telecom businesses.
“Given Reliance’s strong credit rating and cash flows, banks across the globe wanted to participate in the loan exercise back in March. The strong demand for the loan after two rounds of syndication meant that there was still money on the table that banks were willing to offer; so, the company decided to retain more than it needed. This is not the first time RBI has given permission for such an increase. Reliance itself has sought special permission from the RBI before,” ET quoted a source saying so.
Earlier, media reports suggested that Reliance Industries was planning for a foreign-currency loan of up to $2 billion.
RIL is in talks with lenders for a foreign-currency loan of up to $2 billion to fuel the ongoing expansion of its oil-to-telecoms business, Bloomberg reported. The Mukesh Ambani-led conglomerate plans to use the country’s dedicated external commercial borrowing route to secure the loan, the report added.
The facility may have a maturity period ranging between three to five years and the proceeds will be used for capital expenditure and to refinance another loan that matures in September. The lenders involved in the discussions include Bank of America Corp., Citigroup Inc. and Standard Chartered Plc, said the report.
Read more: Reliance in talks to secure $2 billion foreign-currency loan to fuel expansion: Report
Brokerage firms are positive about RIL stock. Brokerage JM Financial has given a ‘buy’ rating to Reliance Industries as it suggests a target price of ₹2,900. The brokerage said that the concerns about debt are overdone.
JM Financial said that Reliance Industries share prices were very close to our worst-case value, the key debates with investors have been on potential triggers that could actually drive a decisive rerating in the stock.
Reliance shares hit their 52-week high of ₹2,754.70 on BSE on December 1, 2022. As of June 20 close, the stock is down seven per cent from its one-year peak.
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Updated: 21 Jun 2023, 08:46 AM IST