Why RIL share rose nearly 7% in last three trading sessions

Reliance Industries Ltd (RIL) share has risen nearly 7% in last three trading sessions after the Mukesh Ambani-led conglomerate announced the demerger of its O2C (oil-to-chemical) business into a wholly owned subsidiary. The stock has gained 6.84% or Rs 137.45 since February 22 when it closed at Rs 2,007.40 on BSE.

The large cap stock ended 3.84% higher at Rs 2,144.85 today against previous close of Rs 2059.80 on BSE. In today's trade, the stock touched an intraday high of Rs 2,140, rising 3.16% on BSE.

Top gainers today: 5 shares rise up to 5%; ONGC, NTPC, RIL, Axis Bank and IndusInd Bank

The share stands higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages. The large cap stock has gained 51.44% in one year and risen 8.07% since the beginning of this year. Market cap of the firm rose to Rs 13.59 lakh crore on BSE.

The move of hiving off O2C business is big positive for the stock.

Brokerage Motilal Oswal said in a note, "We believe the recent move of creating an O2C segment will invite various new avenues for RIL in terms of both opportunities and upside. Using the SoTP-based valuation, we value the Refining and Petrochemical segment at 7.5x FY23E EV-to-EBITDA to arrive at a valuation of Rs 780/share. We ascribe an equity valuation of Rs 900/share to RJio and Rs 645/share to Reliance Retail. We reiterate Buy with a target price of Rs 2,325/share."

Mukesh Ambani's RIL gets SEBI approval to demerge O2C business

The company has sought shareholder and creditors' approval on plan to demerge its O2C business.

"Reorganisation will be beneficial to all stakeholders of RIL -- management control of O2C continues with RIL, existing O2C operating team moves with the transfer of business, no dilution of earnings or any restriction on cash flows, and retaining of its international and domestic AAA credit ratings," RIL said.

RIL has said the independent growth of the company will enable the focused approach towards opportunities across the O2C value chain.

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