Reliance Naval is among the top Private Defence Player which is also listed on Exchanges. Before, it was a part of Pipavav Group and called as Pipavav Defence. However, after ADAG Group Chairman Mr Anil Ambani vision and confidence on Defence Sector, Reliance Infra decided to buy it from its promoters.
Before its Acquisition, Pipavav Defence was already suffering from some Loan issues. Then, these issues peaked during the control of Anil Ambani. Thereafter, Accountants also raised few questions on Company’s strength and shows few concerns over its Going Concern Concept. From this, accountants of company were mean that they don’t think company would be able continue its business operations for long-term.
After just few days of releasing this news in market, we saw a sharp fall in shares of RNaval. Finally around 2–3 months later, shares of Rnaval settled around Rs 11–13, and from July end, it has started rising by 5 percent circuits day by day. Currently, stock of Rnaval is trading around Rs 20.
In my opinion, Reliance Naval still has many opportunities because Rafale Deal is still in the hands of company. Despite of concerns over its Financial strength and Congress party making many False sentences against Anil Ambani Company and BJP Government, the deal is still secured and will probably remain in the hands of Anil Ambani company until it not completes it.
What I think now is that Mr Anil Ambani is now more concern on its Defence sector presence rather than anything. Therefore, they are trying to first resolve all the Debt issues associated with their other Companies and become almost Debt free. Becoming debt free will help him in many ways. The biggest advantage of becoming debt free is that they would then may get much bigger loans from Banks in easy way i.e higher credit score.
The main focus of Anil Ambani is now on Defence and Infrastructure sector. Therefore, it is possible to see most of the future deals going into the hands of their Reliance Infrastructure or its Subsidiary Reliance Naval.
After reading above paragraphs, probably you would be thinking that i am a supporter of Anil Ambani Shares. But its not true. I am not a supporter of him. But his different listed companies like Reliance Infrastructure, Reliance Naval, Reliance Communications and Reliance Power attracts me so much that I would never consider them highly valued when most of them are trading at just 5–10 PE Level. Even, they have so much Valuable and undervalued assets that his Reliance Capital which is a Financial Company is trading below its Book Value. This is very rare to see when most of the other Financial stocks are trading above Price/Book ratio of more than 5.
Reliance Naval share price Forecast
There are some risks associated with investing in Reliance Naval like Low Capital Availability, weak financials and balance Sheet strength. But one thing which is positive in this investment is that you are investing in a Private Defence Player. Generally, Government Owned shares are found to be least valued in our markets as compare private Owned Promoter’s Shares. Thus, it creates less opportunity for investors to hold majority of their investment money in Government owned shares for long-term.
Don’t think that Anil Ambani Shares will never see a turnaround stories! He is working on it and is now very close to complete all its major deals. It’s just a matter of time. Once the cash amount of nearly Rs 33,000 crore would come into hands of ADAG Shares ( Rs 18,000 crore from Rcom and Rs 15 crore from Reliance Infra ), it will help the group a lot to reduce a major part of their Debt.
Overall, I think Reliance Naval is a good bet from available Undervalued stocks for next 2–3 years.
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