Mukesh Ambani and Reliance Industries have the best day since 2020

Mukesh Ambani’s Reliance Industries had the best Monday after the stock broke out of a trading range that lasted well over two years.

The shares climbed 7%, the most since September 2020, on optimism the disruption caused by the ongoing Red Sea crisis will increase margins on some oil products in Asia. 

The rally propped the net worth of Ambani to $111.1 billion, according to the Forbes Real-Time Billionaire list, putting him in the 11th place, just above Mexico's richest person Carlos Slim.

News that Disney’s India unit may now be valued at less than half the valuation the US company earlier pursued in a proposed merger with Reliance’s media business also helped boost the rally. 

Reliance surpassed Petrochina Co and Shell Plc in market capitalisation, becoming the fourth most valuable energy company globally. It is now behind only Saudi Aramco, Exxon Mobil, and Chevron Corp on the global market-cap leaderboard.

“Definitely, there is optimism around refining margins picking up further for the energy business” because of the Red Sea tensions," Hemang Khanna, vice president at Nomura Financial Advisory and Securities India, was quoted as saying in a Bloomberg report. 

The impact of the crisis on product margins will “flow immediately into Reliance’s earnings” during the quarter ending in March, he said.  

With Russian oil supplies to India still largely unaffected by the Houthi attacks on cargo vessels in the Red Sea, Reliance, one of the biggest buyers of Russian crude, is gaining from the widening diesel margins. Refinery margins for producing gasoil over Dubai crude in Asia have risen to $25.53 per barrel from $20 per barrel a month ago, according to third party data compiled by Bloomberg.

Reliance opened at ₹2,713, hit a high of ₹2,905 before closing at ₹2,896. Since October 2021, it has consolidated within ₹2,000-2,650 levels. With this month's 12% gain, the stock has breached the consolidation zone.

The spurt in Reliance and ONGC also helped a gauge of energy stocks on the BSE close at a record high.