Sources indicate that RIL plans to utilise the surplus funds for multiple purposes. Firstly, it aims to bolster its working capital needs, ensuring a solid financial foundation for its operations. Secondly, the additional funds will be directed towards expanding its new energy and telecom businesses. This strategic investment is aligned with RIL’s commitment to sustainable growth and its ambition to capitalise on emerging opportunities in these sectors.

The Remarkable Demand for RIL’s Loan

During the loan exercise held in March, RIL’s impressive credit rating and cash flows attracted significant interest from banks worldwide. The loan’s exceptional demand, even after two rounds of syndication, resulted in more than available funds. Recognising the opportunity presented, RIL made the intelligent decision to retain more than it initially required. This is not the first time RIL has obtained special permission from the RBI for such an increase, highlighting the trust and collaboration between the two entities.

Foreign-Currency Loan for Ongoing Expansion

Media reports suggest that RIL is currently discussing a foreign-currency loan amounting to $2 billion with lenders. Bloomberg has reported that RIL plans to utilise the country’s dedicated external commercial borrowing route to secure this loan. The loan’s maturity period is expected to range between three to five years, and the proceeds will be allocated towards capital expenditure and refinancing an existing loan that matures in September. Significant financial institutions such as Bank of America Corp., Citigroup Inc., and Standard Chartered Plc are reportedly involved in the discussions, reflecting the global interest and confidence in RIL’s growth trajectory.

Analysts Bullish on RIL Stock

Brokerage firm JM Financial has expressed a positive outlook on RIL’s stock, providing a ‘buy’ rating with a target price of ₹2,900. The firm believes that concerns regarding RIL’s debt are exaggerated and that the stock is trading close to its worst-case value. JM Financial identifies potential triggers that could lead to a decisive rerating of the stock, instilling confidence in investors. While RIL shares reached a 52-week high of ₹2,754.70 on BSE in December 2022, they have since experienced a seven percent decline as of the close on June 20, 2023.

Expert Advice and Considerations

It is important to note that the views and recommendations presented in this article reflect the opinions of individual analysts and brokerage firms. Investors are advised to consult certified experts and conduct their due diligence before making any investment decisions. Mint encourages its readers to stay informed by accessing market-related news through their trusted sources.

The RBI’s decision to grant RIL permission to retain an additional $2 billion serves as a testament to RIL’s formidable reputation, financial strength, and growth potential. These surplus funds will empower RIL to bolster its working capital and support the expansion of its new energy and telecom businesses. RIL’s ongoing discussions for a foreign-currency loan further highlight its ambitious growth plans and ability to attract interest from prominent financial institutions. As RIL continues to navigate the path of success, investors remain optimistic about the company’s prospects.

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