RIL Diversification in to Milk Dairy

Reliance Industries rose 2.19% to Rs 2373 at 10:43 IST on BSE on reports the firm could spend Rs 5000 crore by 2010 in distribution and retail sale of milk.

The scrip had touched a high of Rs 2377.50 and a low of Rs 2322.50 so far during the day. The stock had hit a 52-week high of Rs 3252.10 on 15 January 2008 and a 52-week low of Rs 1353.10 on 5 April 2007.

India’s largest private sector firm by market capitalization and oil refiner has an equity capital of Rs 1453.65 crore. Face value per share is Rs 10.

At the current price of Rs 2373, the scrip trades at a PE multiple of 10.67, based on Q3 December 2007 annualised EPS of Rs 222.26.

RIL’s net profit rose 162.2% to Rs 8,079 crore on 22.7% rise in sales to Rs 34,590 crore in Q3 December 2007 over Q3 December 2006.

The investments may rise to Rs 7000 crore later, the reports added. To compete with existing local dairy product makers Amul and Mother Dairy, Reliance Industries (RIL) is offering full-cream milk at Rs 22 per litre at its 585-odd Reliance Fresh outlets, Rs 2 less than what competitors are offering, the reports suggested.

RIL would buy milk from 70,000 villages across India, including in Punjab and Haryana in the north and Andhra Pradesh in the south., the reports suggested.

RIL runs retail outlets with a brand name ‘Reliance Fresh’. The firm is engaged in oil refining, producing and distributing plastic and intermediates, polyester filament yarn, fibre intermediates, polymer intermediates, crackers, chemicals, textiles. It is also into exploration and production of oil and natural gas.