Reliance Industries' (RIL) plans to re-organise its investment in Reliance Jio Infocomm Ltd (RJIL) to make Jio a net debt-free company by the end of the current fiscal, which could unlock significant value, global brokerage firm UBS has said.
Making this estimate in a report on Monday, UBS reiterated its 'Buy' advice for RIL stocks and increased the stock price target from ₹1,500 to ₹1,750. RIL is currently trading at ₹1,448 a share on the BSE.
"RIL announced plans to reorganize its investment in RJIL to make Jio a net debt free company by end-FY20. We think the reorganisation could unlock significant value at the platform entity or even at the Jio level," UBS said.
The brokerage firm further said that the reorganisation proposal for Jio involves a debt transfer from Jio to RIL standalone, which would make Jio's capital structure similar to global technology peers.
"Our understanding from interactions with management is that the strategy would: optimize platform entity capital structure with fair value of $60-70 billion, facilitate early monetisation and potential partnerships with global platform companies like Alphabet, Amazon and Alibaba.