Shares of Reliance Industries Ltd. were trading lower as OPEC+ announced production cuts and investors took stock of the value unlocking exercise at the oil-to-telecom conglomerate, starting with its financial services business.
Oil prices surged as much as 8% after the shock announcement by OPEC+ to reduce output by around 1.16 million barrels a day. Russia, a member of OPEC+, also said it will extend its cuts of 500,000 barrels per day to the end of this year.
The U.S. has called the OPEC+ decision ill-advised at a time when global central banks have yet to tame inflation triggered by higher energy prices following Russia's invasion of Ukraine. The plan to lower output comes when demand for crude is expected to fall as the global economy cools.
For Reliance, the crude price is not the only trigger. The conglomerate has decided to spin off Jio Financial Services Ltd., mirroring the shareholding of its parent. Reliance Industries had approved a scheme for the demerger of its financial services business in October last year. Investors are now watching to see if it will follow the same playbook for its retail and digital services businesses.
Shares of RIL were trading 0.25% lower at 12:39 p.m., compared with an almost unchanged Nifty 50. Shares of Reliance ended almost unchanged at Rs 2331.45 on Monday.
The total traded volume was 33% lower than the daily average.
Of the 37 analysts tracking the company, 32 maintain a 'buy' rating, three recommend a 'hold, and two suggest to 'sell' the stock, according to Bloomberg data. The average of the target prices suggests a potential upside of 22.8% over the next 12 months.
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