RIL FRL Merger Rejection by SC - Big Setback for RIL

On 26th July, in our analysis of Q1 numbers of RIL, we indicated RIL share falling to 2,000 levels, when it was ruling at Rs. 2,100 plus. Share fell to a low of 2,016 on 28th July. To have further setback to RIL, Supreme Court delivered judgement on plea of Amazon against the merger of Future Retail (FRL) with Reliance Retail. The apex court ruled that Future Retail's $3.4 billion deal, to sell its retail assets was bound by an arbitrator's order that put the transaction on hold. Supreme Court said that an order by a Singapore arbitrator in October - that put the deal on hold after finding merit in Amazon's objections - was valid.

RIL has been struggling to maintain its leadership position, by relying much on its new generation business,  Reliance Jio and Jio Mart, as old generation business are unable to see any growth drivers, due to which, RIL also unable to monetize its 25% stake in its O2C verticals.

RIL now unable to acquire FRL, will definitely see Jio Mart lagging behind, as Flipkart, Amazon and Tatas  will be more aggressive in capturing larger e retail market share. Even in Jio, Bharti is giving a tough competition, while RIL as such has 66% stake only in JIO.

Will RIL remain an under-performer in this month as well?

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