Buy RIL

Posted on | August 29, 2005 |

The Smart Investor puts a buy on Reliance Industries with the following arguments.

Apart from its business plans, what makes RIL an attractive bet is that it provides an indirect play on the telecom sector. RIL stock price has already run up substantially as businesses get separated.

But when the Reliance Infocomm goes for an initial public offer in March, there could be more gains. This is based on the fact that the Reliance Infocomm was valued at to Rs 32,000 crore for the conversion of preference shares held by Reliance Industries. Bharti Tele-Ventures, which has 13.2 million subscribers, is currently valued at over Rs 50,000 crore.

In fact, Reliance Infocomm has a comparable mobile footprint and subscriber base (12 million) compared to that of India’s top mobile operator which means there could be more upsides for Reliance Communications.

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