Reliance Industries ruled firm in a flat market on Friday on buying support from institutions.
By 14:50 IST, the stock of the petrochemicals and oil refining giant was the second biggest gainer among BSE Sensex stocks, up by 2.08% to Rs 294.90. A volume of over 1.5 million shares was recorded on the counter. In 13 sessions between 31 January and 20 February 2003, the Reliance Industries stock rose by 9.76% to Rs 288.90 from Rs 263.20.
Dealers said the rise in the RIL scrip was due to sustained buying by foreign institutional investors. However the identity of the FIIs were not known. They said the stock's valuation was attractive. Also, there were rumours that Reliance Infocomm, an arm of RIL, has garnered a huge response from customers (1 million) for its Wireless-in-Local Loop mobile services. Reliance Infocomm is 45% owned by RIL.
Reliance Infocomm is expected to roll out basic telephony services in 17 states soon. It has already laid 40,000 km of optic fibre across the country to cover various facets of telecom services including basic, Internet and long distance telephony. The company is expected to provide cheaper services. It is banking on a lower margin-high volume game. RIL has reportedly invested a huge sum in Reliance Infocomm - of over Rs 25,000 crore (Rs 250 billion).
Earlier, US-based Reliance group subsidiary Reliance Communications acquired licences from the US and the UK governments for setting up telecom networks in those countries. The company will operate as a facility-based carrier in the US for providing telecom services between the US and other countries including India.
Meanwhile, one of the dealers said that apart from institutions, operators also bought the RIL stock for supporting the BSE Sensex, as the latter has considerable weightage in the index.
Earlier, RIL signed agreements with the Centre in respect of the oil and gas blocks awarded to it under the third round of the New Exploration Licensing Policy. RIL, in consortium with UK-based Hardy Oil, signed agreements for nine blocks including seven deepwater blocks.
In October 2002, RIL had said that its Krishna-Godavari basin (Andhra Pradesh) gas project would go on stream around mid-2004. The cost of development of the project may total $1.3 billion, it added.
RIL is basically a petrochemicals maker (the largest in the country) and a petroleum refiner (after it merged group company RPL with itself). The company has emerged as among the largest private sector players in the oil exploration segment as well.
Last month, RIL registered impressive results for the third quarter ended 31 December 2002. It posted a 24% rise in net profit to Rs 1,083 crore (Rs 10.83 billion), compared to Rs 873 crore (Rs 8.73 billion) in the corresponding period of the previous year. Total income increased by 7.58% to Rs 11,243 crore (Rs 112.43 billion) from Rs 10,450 crore (Rs 104.5 billion) in DQ 2001. The figures for the corresponding previous period have been restated to include the effect of the amalgamation of Reliance Petroleum with RIL with effect from 1 April 2001.
The 24% rise in RIL's net profit has beaten a capitalmarket.com poll (of three analysts) which estimated net profit in the range of Rs 766-828 crore (Rs 7.66-8.28 billion). Sales were forecast at Rs 11,045-12,500 crore (Rs 110.45-125 billion).
Meanwhile, the promoters held 43.7% equity stake in RIL, while the public, domestic and foreign institutions held 15.3%, 13% and 26.4% respectively.
BSE code: 500325
More Hot Pursuits