In the last month, Mukesh Ambani's wealth increased by Rs 40,000 crore to Rs 4.2 lakh crore ($59 billion) due to the 9.6 per cent jump in the share price of Reliance Industries (RIL). Last month's rally of RIL's shares has helped the company regain the top spot as the most valued company in India, ahead of its competitor Tata Consultancy Services (TCS). The market capitalisation of RIL stood at Rs 8.57 lakh crore on Friday, while that of the IT bellwether was at Rs 7.46 lakh crore. The gap had widened by Rs 1.11 lakh crore in the last 2-3 weeks because of the rise of RIL, while TCS faced selling pressure.
The share price of RIL rose 9.6 per cent in the last one month to Rs 1,352.40, while TCS' share price fell 7.75 per cent to Rs 1,987.05. BSE Sensex rose by 2 per cent in this period. The rally of RIL's shares was on the fundamentals of its strong performance of its telecom firm, Reliance Jio, which is expected to continue gaining market share. Reliance Jio enjoys better earning margins compared to its rivals -- Bharti Airtel and Vodafone Idea -- which are losing customers. According to the estimates released by Axis Capital, the operating income of Reliance Jio is expected to increase by 5.2 per cent in the second quarter, but the EBITDA margin is expected to stay somewhat steady at 40.2 per cent. RIL is also expected to arrest the fall of its gross refining margin (GRM) in the second quarter. On 13 September, the promoter's stake in RIL increased to 48.87 per cent from 47.29 per cent in end of June due to an internal share transfer involving promoter firm.
The market experts say that it would be tough for TCS to make a comeback in the short term as it is facing macroeconomic issues and a slowdown in the banking sector in the US and Europe. Along with delays in the retail sector deal executions, TCS' second-quarter profit growth subdued to a mere 1.8 per cent at Rs 8,042 crore. The profit dipped 1 per cent sequentially. Revenues grew 5.8 per cent to Rs 38,977 crore in the July-September period, however, concerns remain in its largest vertical, BFSI.
According to research reports on TCS result, the current quarter will see similar trends as well. In such situation, a double-digit growth will be difficult for the largest company in the Tata fold. While TCS continues to see healthy orders, conversion to revenue is taking time, reports said.
HDFC Bank is the third most valued firm in the Indian stock market, with a market capitalisation of Rs 6.56 lakh crore. Hindustan Unilever (HUL) is next in line, valued at Rs 4.34 lakh crore.