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RIL gets FIIs' support
February 24, 2003 12:37 IST
Reliance Industries strengthened for the second straight session on Monday as FIIs were gathering around over the probability of some favourable development manifesting in the company.
The scrip of the petrochemicals and oil industry focused company gained 1.9% to Rs 300.55 on BSE barely as trading commenced. It hit a high of Rs 310.65 earlier on. Volumes were impressive, at 7.9 lakh shares on BSE in just 20 minutes of trading.
The rise in Reliance Industries, a heavyweight, set off a jump of 20% to 3,327 in the BSE Sensex today. RIL has a weightage of 15% in the Sensex.
On Friday, RIL surged 2.1% to Rs 295.05 on high volumes of 2 million shares. The scrip has been witness to some degree of vaccillation in the last few months after a solid rush upward from its late-October 2002 low. The scrip had got a solid boost from the discovery of huge gas reserves in the Krishna-Godavari basin.
RIL's market cap moved up by Rs 1,522.05 crore (Rs 15.22 billion) or 3.8% last week to Rs 41,200 crore (Rs 412 billion).
As per market talk, FIIs have been active in RIL of late. Some operators too are believed to be mopping up the share. "Perhaps something favorable is on the cards at the company's stable," a dealer with a local brokerage speculated.
RIL has also been boosted by talk that its 45% subsidiary Reliance Infocomm has garnered huge response from customers (1 million) for its wireless-in-local loop mobile services.
Reliance Infocomm is expected to roll out basic telephony services in 17 states soon. It has already laid 40,000 km of optic fibre across the country to cover various facets of telecom services including basic, Internet and long distance telephony. The company is expected to provide cheaper services. It is banking on a lower margin-high volume game. RIL has reportedly invested a huge sum in Reliance Infocomm - of over Rs 25,000 crore (Rs 250 billion).
Following the merger of Reliance Petroleum with RIL, the petroleum segment has become a major contributor to operations and revenue.
RIL has acquired control over two companies in the last few months. It acquired government stake in petrochemicals firm IPCL which makes RIL a near monopoly player in some of the petrochemical segments. It also recently acquired control over power utility firm BSES.
Last month, RIL registered impressive results for the third quarter ended 31 December 2002. It posted a 24% rise in net profit to Rs 1,083 crore (Rs 10.83 billion), compared to Rs 873 crore (Rs 8.73 billion) in the corresponding period of the previous year. Total income increased by 7.58% to Rs 11,243 crore (Rs 112.43 billion) from Rs 10,450 crore (Rs 104.5 billion) in DQ 2001. The figures for the corresponding previous period have been restated to include the effect of the amalgamation of Reliance Petroleum with RIL with effect from 1 April 2001.
In October 2002, RIL had said that its Krishna-Godavari basin (Andhra Pradesh) gas project would go on stream around mid-2004. The cost of development of the project may total $1.3 billion, it added.
RIL is also expected to bid for government stake in state-run oil refiner HPCL .
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