Reliance Industries' market cap nears $200 bn-mark as shares surge 4.4%

The market value of Reliance Industries is fast approaching the $200-billion mark. Gaining for the sixth day, shares of RIL surged 4.4 per cent to end at Rs 2,148. The partly-paid (PP) shares soared nearly 9 per cent to Rs 1,285. After factoring-in the value of PP shares, the total market cap of the currently stands at Rs 14.16 trillion, or $189.2 billion (Re-$ conversion rate of 74.83). The Mukesh Ambani-led firm is only 5.4 per cent away from becoming first Indian company to top the $200-billion market cap mark.

At present, RIL is world’s 46th most valuable company. The company’s market cap has also pipped that of US-based ExxonMobil, which was once the world’s most valuable company. Currently, the energy giant has a market cap of $186 billion.

In the past six trading sessions, shares of RIL have soared more than 16 per cent. Shares of RIL have jumped 2.5 times from 2020 lows of Rs 868 in March.

The strong momentum in the stock has been underpinned by series of investments in its telecom and digital services subsidiary Jio Platforms. Also, the strong demand for the company’s Rs 53,124 crore rights issue. Both these initiatives were aimed at making the company debt-free.

Analysts believe there is more steam left in RIL rally.

BNP Paribas on Friday revised upwards its target price (TP) for the stock by 43 per cent to Rs 2,317.

“We reiterate BUY on RIL with a revised SoTP-based TP of Rs 2,317. We update for the Jio proceeds which drives large part of the increase in valuation along with a higher multiple for Jio and the retail business in light of the potential growth outlook. We now value RIL on an FY23E basis to better capture the growth outlook for all the businesses. Despite its recent run, RIL still has multiple catalysts in place in terms of a stake sale in retail and a potential sale in O2C even at a lower valuation (as it tries lower its dependence on O2C),” said Amit Shah, analyst at BNP Paribas in a note.

SoTP is sum of the parts. O2C is oil-to-chemicals.

RIL was in talks with Saudi’s Aramco to seel 20 per cent of its O2C business for $75 billion. However, the deal was stalled due to differences over valuations.

Analysts say the next leg of growth will come from non-O2C businesses.

“RIL has now become a mothership surrounded by businesses which both feed of themselves while being attached to the parent. We think the consumer retail business and Jio will have multiple opportunities to cross sell in the future. The digital initiatives can expand RIL’s reach and keep bringing them closer to the consumer. This in turn will give them the power to be best placed to understand changing consumer trends and hence position themselves in the years to come,” the BNP note says.

In April 2018, RIL was beaten by Tata Consultancy Services (TCS) to the $100-billion mark. The market cap of both RIL and TCS had moved largely lock-in step in the past two years. However, now the gap between RIL and TCS—country’s two most valuable firms—has widened to 75 per cent.