Reliance Industries shares rise over 2%; here’s why

Shares of Reliance Industries Ltd (RIL) emerged as the biggest gainer on the stock exchanges in early trade on Friday, in sync with the broader market, after the oil-to-telecom conglomerate informed the exchanges that Reliance Consumer Products has completed the acquisition of 51% stake in Lotus Chocolate Company. Reliance Consumer Products, the FMCG arm and a wholly-owned subsidiary of Reliance Retail Ventures, has acquired a controlling stake in Lotus Chocolate for ₹74 crore.

RIL shares opened higher at ₹2,453.60, up 0.6% against the previous closing price of ₹2,438.55 on the BSE. In the first two hours of trade so far, the blue chip stock surged as much as 2.2% to ₹2,492, while the market capitalisation climbed to ₹16.83 lakh crore. On the volume front, 0.55 lakh stocks changed hands over the counter as compared to two-week average volume of 1.05 lakh stocks.

In a similar trend, Lotus Chocolate shares were locked in a 5% upper circuit limit at ₹152.40 against the previous closing price of ₹145.15 on the BSE.

Meanwhile, the BSE Sensex was trading 237 points, or 0.38%, higher at 62,110 levels, with 20 of 30 index heavyweights trading in green zone.

At the current price level, RIL shares trade 11.5% lower than its 52-week and 14% higher than its 52-week low. The counter hit a 52-week high of ₹2,816.35 on June 3, 2022, and a 52-week low of ₹2,180 on March 20, 2023. In the last one year, the RIL stock has fallen nearly 4%, while it lost more than 8% in a six-month period. In the last one month, the counter has risen 5%, while it gained over 1% in a week.

In a post market hour release on Thursday, RIL said RCPL has taken sole control of Lotus Chocolate with effect from May 24, 2023, after it completed the acquisition of equity shares pursuant to the open offer made under SEBI takeover regulations.

In December last year, RCPL signed a deal to acquire a 51% stake in Lotus Chocolate and also proposed an open offer to acquire another 26% stake in the chocolate maker at a fixed price of ₹115.50 per share. The capital infused by RCPL was intended to drive the growth and expansion of Lotus into a comprehensive confectionery, cocoa, chocolate derivatives and related products manufacturer across industrial and consumer market spectrum.

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RCPL and Reliance Retail Ventures will together acquire 33.38 lakh shares of Lotus Chocolate from the open market, according to DAM Capital, which is managing the offer.

Established in 1988, Lotus Chocolate is primarily a B2B packaged foods company that supplies cocoa products to companies such as Cadbury, Britannia, Vadilal, and Amul. The B2B business accounts for nearly 95% of the company’s revenue, while it generates the remaining 5% from the B2C segment, which consists of brands such as Chuckles and Milky Punch, sold only in South India, and in some regions of Gujarat and Maharashtra. 

Reliance recently forayed into the FMCG business through its arm, RCPL, by launching a brand 'Independence' for staples, processed foods, beverages, and other daily essentials in Gujarat. The brand will be rolled out across India in a few months. The brand, which will compete with the likes of Tata Consumer Products, Hindustan Unilever, Nestle India, Britannia Industries, and ITC, among others, will sell made-in-India consumer products ranging from processed foods to daily products. 

Besides, RCPL parent Reliance Retail Ventures acquired a 100% stake in METRO Cash & Carry India, a wholly owned subsidiary of German wholesaler METRO AG, for ₹2,850 crore.

Reliance has been on an acquisition spree after Isha Ambani, during the company’s 45th AGM in August 2022, announced that Reliance Retail will enter the FMCG space. In September, the company acquired the homegrown soft drink brand Campa from Delhi-based Pure Drinks Group for around ₹22 crore. RIL also acquired another soft drink brand Sosyo from Surat-based Hajoori. Over the last three years, Reliance Retail has acquired brands like Hamleys, Just Dial, Milkbasket, Zivame, Clovia, Portico, Netmeds, and Urban Ladder among others. It has also partnered with 7-Eleven, the iconic global retail chain, to start its operations in India.