Bloomberg earlier today reported that Saudi Aramco is in advanced talks to buy a minority stake in Reliance Industries’ oil-to-chemical business in an all-stock deal that could hand RIL a 1 per cent stake in the global refining giant.
The development was welcomed by investors as RIL’s stock rose over 1 per cent higher after rising close to 3 per cent at one point. Aramco shareholders were less impressed as the oil behemoth’s stock fell 1 per cent on the Saudi stock exchange Tadawul.
While RIL shareholders would have liked more cash in exchange for close to 20 per cent stake in Reliance O2C, they appear to be content with the fact that the slowing refining business’ contribution to the consolidated earnings will reduce further.
The Aramco deal, however, no longer holds the same charm for investors as it did in 2019 when Mukesh Ambani announced it for the first time in front of RIL’s shareholders. Investors these days are more focused on what RIL will do to improve its free cash flow, especially as it enters another cycle of capital expenditure with the announcement of its green energy ambitions.
Eicher’s CEO troubles
Investors have been bummed out by the announcement that Vinod Dasari will be vacating his role as the chief executive officer of Royal Enfield, ’ flagship brand. Dasari’s exit came as a shock that has taken Eicher’s stock down by nearly 9 per cent in three days.
While Dasari himself assured investors in the conference call that he is leaving the iconic Royal Enfield brand in trusted hands, the fact that he won’t be directly replaced has raised some eyebrows. Eicher will induct B Govindarajan as wholetime director on its board and make him executive director of all things Royal Enfield.
Further, Eicher Motors told investors that its production capacity will be constrained going ahead because of the chip shortage issue that is plaguing the global automotive industry. Given the choppy waters that Royal Enfield is treading due to the pandemic and chip shortage issue, investors would have liked to have the calming presence that Dasari provided. Only time will tell if the company will miss his absence;Eicher will hope it does not.
IPO listings are getting dull
Are investors finally saturated with initial public offerings? Have we reached peak IPO exuberance already?
Those are the questions in everybody’s mind as four IPO stocks made a less-than-impressive debut on the bourses today. While the four stocks – Devyani International,
Diagnostics, Tiles and Windlas Biotec – listed at a premium to their issue price, three of them ended deep in the red territory.
Shares of Devyani International, Krsnaa Diagnostics, and Windlas Biotec closed the day lower than 3-13 per cent from their listing price suggesting that secondary market investors weren’t buying the hype that IPO investors seemed so happy to indulge in.
The dullness also goes to show the sudden shrinking of risk appetite in the market among investors after the knee-jerk sell-off in broad market stocks last week, which bled portfolios of many investors.
Time will tell if this is the turning point in investors’ interest for IPO stocks; Paytm and LIC will hope that is not the case.
