Is RIL's Rs 1 lakh cr capex for core biz ready to take off?

Moneycontrol Bureau

Reliance Industries (RIL) is expected to invest around 1,00,000 crore in its various business verticals in the next five years, of which 85 percent would be in oil, gas and petchem businesses, according to reports in the Economic Times and Mint.

Analysts, who were quoted in reports had met RIL management recently, wherein executives re-iterated their last year's capex plan.

In its 38th annual general meeting last year , chairman Mukesh Ambani had said that the company hopes to produce an additional 30 million cubic metres per day of gas at its KG D6 field. and had also set a target of 60 million cubic meters a day (mmscmd) gas output from KG D6 in two to three years.

The company plans to grow by entering into partnerships in the oil and gas sector globally, he had said.

What has perhaps boosted the company's confidence is the government's assurance to clear 34 out of the 39 oil and natural gas projects pending security clearance. The Cabinet Committee on Investment has already taken up the projects for speedy approvals.

Meanwhile, the remaining 15 percent capex is earmarked for telecom and retail segments, which are considered engines of growth for the company. The firm is increasing its polyester capacity by 1.5 million tonne by next year. RIL is also looking to offer specialised content in key domain areas like education, healthcare, security, entertainment and financial services.

As far as telecom plans are concerned, RIL is looking to offer voice telephony and data services through its pan Indian 4G network, on its own after the Telecom Commission last month decided to allow firms with broadband wireless access spectrum to offer voice services after paying a fee.

Recently, Bank of America Merrill Lynch has upgraded the company stock from 'underperform' to 'neutral' rating with a target price of Rs 893 on gradual recovery in its exploration and production business. Morgan Stanley too has upgraded the stock to "overweight" from "underweight" and raises its target price to Rs 961 on improved operating environment across its core businesses.

Meanwhile, shares of the company are marginally down to Rs 844.15 at 9:30 hours.

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