Reliance Industries Ltd (RIL) shares rose further during the trading session on Thursday after the firm announced a binding deal to form a joint venture (JV) with Viacom 18 and Disney to unite the media businesses. The stock reached fresh life-time highs.
RIL would become a major player in the Indian media industry as a result of this transaction, thanks to its distribution strength and an enviable portfolio of TV networks, sports rights, and digital assets. RIL would invest Rs 1,150 crore in the JV to support its expansion strategy, with the transaction valued at Rs 70,400 crore.
Following the news, RIL shares rose more than 3.12% to a new 52-week high of Rs 2,999.85 on Thursday, with a total market capitalization of around 20.3 lakh crore. The stock closed at Rs 2,909 in the previous trading session on Wednesday.
RIL will own 16.34 percent of the joint venture, Viacom18 would share 46.82 percent, and Disney will own 36.84 percent. Viacom18 is a subsidiary of TV18 Broadcast Ltd, which is itself a subsidiary of Network18 Media & Investments Ltd, of which Reliance Industries Limited owns 73.15 percent.
According to JM Financial, the proposed joint venture between JioCinema and Star India (Colors, StarPlus, StarGOLD, Star Sports, and Sports18) will be owned by RIL. RIL has industry-leading capabilities across businesses that will produce a 14-15 percent EPS CAGR over the next 3-5 years, it added.
"Given that RIL's effective stake in Viacom18 is 71%, RIL's effective stake in the joint venture might be 49.6%. As a result, RIL's net value from the JV could be Rs 23,400 crore, or 35% of its stake. We reaffirm our 'buy' rating on RIL, with an unchanged target price of Rs 3,050, as we feel net debt concerns have passed," stated JM Financial.
According to Motilal Oswal, the transaction will increase RIL's share of the media and entertainment industry. According to the report, the joint venture will have exclusive distribution rights for Disney films and productions in India. The firm indicated a target price of Rs 3,210 for the shares. Jefferies, a global brokerage firm, has maintained a 'buy' rating on RIL with a price objective of Rs 3,140.
