Will Reliance Industries be debt free in 2020-21 ?, Find out how much investment has come so far

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New Delhi, 31 May 2020 Sunday

Reliance Industries Chairman Mukesh Ambani had decided to make the company debt free by March 2021 and they are moving very fast in this direction.

Five different investors have invested more than Rs 78,000 crore in the company in the last few weeks and the deal with several investors is in the final stages. In such a scenario, it has become easier for the company to achieve its net debt free target.

A report from a brokerage firm said that if Reliance's deal with Saudi Aramco was delayed, it would still be in a position to repay its entire debt.

Mukesh Ambani-controlled Reliance Industries sold a minority stake in its digital unit to Facebook and private equity firms such as Silver Lake, Vista Equity, KKR and General Atlantic for a total of Rs. 78,562 crore. Apart from this, the company has raised Rs. 53,125 crore.

"Following the recent deals, we have analyzed Reliance Industries' ledger," said a research report by Edelweiss on the company.

The company had raised Rs. 1.3 lakh crore has been collected. We estimate that even if the Aramco deal is delayed, the company will be able to repay its entire net debt of Rs 1.6 lakh crore in 2020-21.

The report said the company's net debt (total debt) is close to Rs 2.57 lakh crore and it will take more time to repay. Edelweiss said the company's telecom unit, Xiao, has largely met its capital costs.

In such a scenario, Reliance Industries will be able to achieve a free cash flow of Rs 20,000 crore in 2020-21, despite low revenue from the oil and gas sector.

"We estimate that Reliance Industries will sell a 20 per cent stake in Geo," the brokerage said. In addition, the company will get a rights issue after selling the rights issue and Bharat Petroleum's 49 per cent stake in the fuel retail business for Rs 7,000 crore.

In such a scenario, the company will have Rs 1.3 lakh crore in cash, which will enable it to achieve its debt-free target in 2020-21.

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