In an effort to monetise its treasury shares, Reliance Industries Limited (RIL) may sell 1crore treasury shares by Petroleum trust. The company has mandated DSP Merrill Lynch and Citigroup for the same.
The seller, Petroleum Trust, will be offering up to 1crore shares at Rs2,125/share, with an option to sell an additional 1crore shares that would take total proceeds to about $880 million or Rs4,244 crore by selling its own shares.
Company has refrained from making any comment on the issue. The issuance is likely to increase the ex-treasury number of shares from 144.4 crore to 145.4 crore or 146.4 crore (including conversion of RPL shares), as the case may be, thus in turn implying a dilution of around 0.7% to 1.4% or so.
Reports suggest that RIL is raising funds to finance an overseas E&P asset buyout.
We keep our earnings and EPS estimates intact pending clarity on the size of issuance. We continue to maintain our POSITIVE view on the company with a Target Price of Rs2,340.