Reliance Industries Ltd (RIL) share price gained half a per cent at Rs 2,124 apiece on BSE, while shares of Just Dial tumbled over 5 per cent to Rs 1,016.86 apiece on Monday. Last week, Reliance Retail Ventures (RRVL) said that it will acquire a majority stake of 66.95 per cent in Just Dial. JP Morgan Equity Research has given a neutral rating to RIL, following the acquisition announcement. The brokerage firm sees just 6.5 per cent upside in the RIL stock by March 2022. It has pegged a target price of Rs 2,250 per share
Reliance Retail has signed an agreement to acquire 40.95 per cent in Just Dial for a consideration of Rs 3,497 crore and will subsequently make an open offer to acquire additional 2.17 crore equity shares of the search engine platform representing 26 per cent in accordance with the takeover regulations.”We would wait to see how the acquisition would expand JioMart’s footprint and if Just Dial Mart is eventually integrated with the JioMart app, thereby putting in place the building blocks of a ‘Super App’,” analysts at JP Morgan said. It also believes that the acquisition of multiple digital properties strengthens RRVL’s online commerce/payment presence.
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The key downside risks to its ‘neutral’ rating and price target include the impact of large spending on new digital initiatives. While upside risks include a sharper-than-expected recovery in the core business and larger than expected telecom tariff hikes. Earlier last week, Just Dial share price hit a new 52-week high of Rs 1,138 apiece. Just Dial stock price has soared 65 per cent, so far this year, as compared to a 13 per cent rise in the Nifty 50 index.
RIL share price has risen 16 per cent from its 52-week low of Rs 1,830 apiece, touched in January this year. So far, nearly 14 lakh shares have traded on BSE, while a total of 21.29 lakh shares have exchanged hands on NSE. Analysts at the research firm, believe higher oil prices, expectations of a refining margin recovery, and ramp-up of Jio Mart should continue to support the stock. Incrementally, larger telecom tariff hikes would be seen as a positive, it added.
Over the last three years, Mukesh Ambani’s Reliance Industries has made multiple acquisitions across digital properties including NetMeds, Urban Ladder, Zivame. Analysts believe that the key attraction for RRVL would be access to Just Dial’s database of merchant listings/retailers and the potential to scale up the JD app and JD Mart Platforms and add on to the Jio Mart app and expand the scope of services and offerings across B2B and B2C.