After announcement of deal with Disney, Reliance hits new-lifetime highs, m-cap tops Rs 20 trillion

Shares of Reliance Industries surged to a new-lifetime high on Thursday after announcing a binding agreement to form a joint venture with Viacom 18 and Disney. RIL surged more than 3.12% to hit a new 52-week high of Rs 2,999.85 on Thursday with market capitalisation at about Rs 20.3 lakh crore.

Reliance-Disney deal

As per the binding definitive agreements integrating the operations of Viacom18 and Star India, Reliance Industries will invest Rs 11,500 crore.

Under the terms of the agreement, the media division of Viacom18 will be amalgamated into Star India Pvt Ltd through a court-approved scheme of arrangement. Reliance and its affiliates will hold 63.16% in the combined entity while Disney will hold the remaining 36.84%, the companies said in a statement.

Also Read: Reliance Industries and Walt Disney announce joint venture, RIL to invest Rs 11,500 crore

The company further said that Nita Ambani will serve as the Chairperson of the joint venture, with Uday Shankar appointed as Vice Chairperson. The transaction values the JV at Rs 70,352 crore ($8.5 billion) on a post-money basis, excluding synergies.

The Mukesh Ambani-promoted company will control the joint venture via a 16.34% direct stake and 46.82% held through Viacom 18

As per JM Financials and said RIL has industry leading capabilities across businesses to drive robust 14%-15% EPS CAGR over the next 3-5 years.

"Given that RIL’s effective stake in Viacom18 is 71%, RIL’s effective stake in the JV could be 49.6%. Hence, net value from the JV for RIL could be Rs 23,400 crore or Rs 35% share. We reiterate 'buy' on RIL with an unchanged target price of Rs 3,050 as we believe net debt concerns are behind us," JM Financial.

Motilal Oswal has also said that RIL would get a larger pie in the media and entertainment business. While noting the JV to have exclusive rights to distribute Disney films and productions in India the brokerage suggested a target price of Rs 3,210 on the stock. Global brokerage firm Jefferies too had maintained a 'buy' rating on RIL with a target price of Rs 3,140