RIL rating: ‘Buy’; Jeffries says company to gain from lower leverage
A fall in crude price and Aramco’s US$75bn annual dividend commitment have delayed the RIL O2C stake buy in our view. The company recently reiterated its focus on downstream investments in India and China. It could replicate its downstream investment model in China by an investment in RIL’s O2C business. RIL would benefit from lower leverage and lower carbon footprint. Reiterate ‘buy’ on RIL.
Expansion in India: Aramco’s IPO prospectus mentioned it’s focus its downstream investments in high growth economies of China, India and Southeast Asia. Recently, CEO reiterated India focus: CEO Amin Nasser in a Dec-20 interview said that while short term adjustments were necessitated by low crude price, they continue to pursue opportunities in high-growth markets of India and China.
