Reliance Industries re-enters $100-billion market capitalisation club after 11 years

Reliance Industries re-enters $100-billion market capitalisation club after 11 years

The Reliance Industries stock rose to its intra day high of 1091 level, a rise of 5.27% from previous close. Its market capitalisation rose to Rs 6,88,766 crore  on the BSE.

The Reliance Industries stock reclaimed the $100-billion market capitalisation mark amid Sensex and Nifty hitting record highs in trade today. It crossed the coveted milestone on October 18, 2007 for the first time. On October 18, the stock rose 11.21% (from its previous close of 671.89) to hit an intra day high of 747.25 level and breached the $100 bn market capitalisation mark. The stock ended at 645.79 level on same day.

Reliance has become the second Indian firm to enter the coveted league after market capitalisation of TCS crossed the $100 billion milestone on April 23, 2018. TCS hit a high of Rs 3,557 on the BSE and reached $103 billion mcap (Rs 6.8 lakh crore market capitalisation).

Deepak Jasani, Head,  Retail Research at HDFC Securities said, "Rallying 14.5% over the past five days, Reliance Industries became the second Indian company (after TCS) to touch $100 bn marketcap on July 12, 2018. The stock price began moving up immediately after its latest AGM on July 5.

Investors seemed to be enthused by the vision pronounced by the Chairman at the AGM of a strategic move to a technology platform company with three key verticals of mobile connectivity, fiber connectivity and new commerce platform for the retail business, even as the traditional businesses of energy and petrochem continue to perform quite well. This may result in scaling up consumer profits at parity level to energy and petrochemicals business over the next decade.

These announcements pushed investors out of the inaction mode on the stock at a time when the Nifty kept rising helped by other largecaps. Cheap relative valuation in terms of P/E also enticed investors to look afresh at the stock when P/Es of other stocks have risen sharply over the last few months. Investors now look forward to better financial parameters from the company including return ratios, capital sweating and payouts. They also look forward to value unlocking by demerger of its various businesses over the medium term going by the past track record of the group."

The Reliance stock rose to its intra day high of 1098 level, a rise of 6.02% from previous close. The stock opened at 1043 level in trade today higher than the previous close of 1036.35 level on the BSE.

At 12:10 pm, the Reliance Industries stock was trading higher by 4.92% or over 50 points at 1087 level. The stock ended 4.42% or 45 points higher at 1082.20 level on the BSE.

Its market capitalisation rose to Rs 6,88,766 crore intra day on the BSE.  The closing market capitalisation of the firm stood at Rs 6,85,725 crore.

VK Vijayakumar, Chief investment Strategist at Geojit said, "It is important that RIL recaptured the $100 billion market cap after 11 years. So the coming years are likely to be better. With the rapid strides RIL is making in telecom, digital and retail segments, the company is likely to sustain its revenue, earnings and market cap growth for many years to come."

The stock has been gaining after the conclusion of Reliance Industries' 41st annual general meeting (AGM) last week on July 5. It has gained 13% during the last five days. As part of the aggressive business plan, CEO and MD Mukesh Ambani had unveiled an ultra high-speed fixed line fibre broadband for homes and enterprises across 1,100 cities and announced plans for an e-commerce platform that may rival likes of Amazon.

Before the AGM, the stock rose 4.36%  in the last three days, and breached the 1,000 mark in early hours of trade on July 5.

But the stock saw profit booking toward the end of trade and closed 2.53% lower at 965 level on the BSE.

It has gained 44% during the last one year and 18% since the beginning of this year. The stock rose 70% in 2017. 

In run up to the rally, the stock closed 3.02% or 30.10 points higher at 1025.75 level becoming the top gainer on Sensex on July 10. It opened at 1,001 level and hit an intra day high of 1028.50 in trade.

The stock rose on July 10 amid reports that brokerage Credit Suisse has initiated coverage and gave a target price of Rs 1,180 assigning 'outperform' rating for the share of Mukesh Ambani-owned conglomerate.

"We believe refining and petrochemical businesses are well understood but Jio's ability to create significant value from the ecosystem that it is building could make a difference. Jio is much more than a telecom business. Lastly, petcoke gasification should help growth in refining margin of Reliance Industries," Credit Suisse said.

The stock also got a push after a media report said India Gas Solutions, a joint venture between Reliance Industries and BP Plc, would bid for city gas distribution licences in the current auction round.

Meanwhile, Macquarie gave outperform rating to the stock with a potential upside of 25%. The brokerage has given a target price of Rs 1,240 for the stock.

The brokerage expects gross refining margin of the conglomerate to reach $20 a barrel by financial year 2020-21 against the estimated $12 per barrel as RIL is expected to benefit with its refining hub-the world's biggest- in Jamnagar, Gujarat having the ability to process a wide range of distressed crude grades.

Published on: Jul 12, 2018, 12:40 PM IST
Posted by: Aseem Thapliyal, Jul 12, 2018, 12:40 PM IST