Reliance Industries shares rally 3%: Three reasons why stock surged today

Reliance Consumer Products forays into healthy functional beverages

On Monday, August 18, Reliance Consumer Products Limited (RCPL), the FMCG arm of Reliance Industries Limited (RIL), said it has forayed into the fast-growing healthy functional beverage space with the acquisition of a majority stake in a joint venture with Naturedge Beverages Private Limited.

Through this JV, RCPL is focused on offering consumers a range of herbal-natural beverages, thus further enhancing its presence as a total beverage company. "The healthy functional beverage space presents a large and rapidly expanding opportunity, driven by a strong consumer shift toward healthier, natural alternatives," RIL said in its press release.

Reliance Jio discontinues 1-GB-per-day entry plans

According to news reports, RIL's telecom arm, Reliance Jio, has discontinued its entry-level plan of 1 GB per day at ₹209 for 22 days and at ₹249 for 28 days. "Jio subscribers now have no choice but to move up to the next plan of ₹299, which offers 1.5 GB per day for 28 days," NDTV Profit reported.

"Airtel and Vodafone Idea base monthly plans also start at ₹299 but provide only 1 GB per day. After this move, the industry’s new base plan is ₹299. This comes as industry watchers expect telecom operators to announce a fresh round of tariff hikes within the next six months," the report added.

Citi, Jefferies bullish on RIL

According to news reports, analysts at Jefferies are positive on RIL. The leading investment firm notes that RIL's annual report shows a rise in capitalised costs in Jio and Retail. FCF (free cash flow) improvement is driven by Jio and a marginal rise in net debt. The analysts note that the company's priorities include home broadband and enterprise in Jio, improving growth and FMCG in Retail and renewables in O2C business.

Citi, according to news reports, said that the SEBI's new move on large IPOs will have a positive impact on RIL's proposed IPO for its telecom arm, Reliance Jio.

Jio's IPO is expected to be one of India's biggest public offers.

SEBI proposal

SEBI on Monday proposed relaxing the minimum public offer requirements for very large companies, while also extending the timelines for them to meet minimum public shareholding norms.

The proposed framework, if implemented, aims to ease the immediate dilution burden on issuers while still ensuring gradual compliance with public shareholding requirements.

As part of this approach, SEBI has suggested retaining the retail quota at 35%, in line with the existing regulations. Instead of reducing retail participation, the regulator is looking to address issuer concerns by amending rules related to minimum public offer thresholds.

This marks a shift from its earlier consultation paper, issued on July 31, which had proposed cutting the retail quota for IPOs above ₹5,000 crore from 35% to 25%, citing difficulties faced by issuers in managing large issues.

In its consultation paper, SEBI noted that very large issuers often struggle to dilute substantial stakes through an IPO, as the market may not be able to absorb such a large supply of shares.

The proposed framework, therefore, is aimed at making Indian listings more feasible for such companies.

Under the proposed rules, however, instead of adhering to a fixed high percentage, large issuers will have the flexibility to start with smaller IPOs and gradually meet shareholding requirements over a longer period.

For instance, companies with a market capitalisation between ₹50,000 crore and ₹1 lakh crore will need to make a minimum public offer (MPO) of at least ₹1,000 crore and 8% of post-issue capital, with the 25% minimum public shareholding (MPS) target to be achieved within five years.

For those with a market capitalisation between ₹1 lakh crore and ₹5 lakh crore, the MPO will be ₹6,250 crore and at least 2.75% of post-issue capital. In such cases, if public shareholding at the time of listing is below 15%, it should be raised to 15% within five years and 25% within 10 years. However, if public shareholding is already 15% or more at listing, the 25% threshold should be met within five years.

In the case of companies valued at over ₹5 lakh crore, the proposed MPO will be ₹15,000 crore and at least 1% of post-issue capital, subject to a minimum dilution of 2.5%. In this case too, issuers with less than 15% public shareholding at listing will be given up to 10 years to reach the 25% mark, while those already above 15% will need to achieve the same within five years.

SEBI pointed out that this staggered approach would reduce the pressure of large-scale dilution immediately after listing. It would also prevent an "oversupply of shares in the market".

Reliance Industries Q1 result

Billionaire Mukesh Ambani-backed Reliance Industries, the country's most valuable company, reported a net profit of ₹26,994 crore in the first quarter of the current financial year, marking an increase of 78% from ₹15,138 crore in the same period last year.

The sharp jump in profit came on the back of a strong surge in other income in the first quarter. Reliance Industries' other income in the June quarter jumped 280% to ₹15,119 crore as against ₹3,983 in the year-ago period.