RIL gains 2.5%, hits fresh record high; stock zooms over 100% in 3 months

Shares of Reliance Industries (RIL) hit a fresh all-time high of Rs 1,804, up 2.5 per cent, on the BSE on Monday, having surged 12 per cent in the past three trading sessions as the company become net debt-free ahead of its March 2021 deadline.

In the past three months, the stock price of RIL has zoomed 104 per cent from its March low of Rs 883.85 hit on March 23, as compared to 35 per cent rise in the benchmark S&P BSE Sensex.

Following stellar gains in its share price, RIL became the first Indian firm to achieve the milestone of crossing Rs 11 trillion market valuation mark on Friday. The oil-to-telecom conglomerate became the first Indian company to be valued at $150 billion.

Though the deleveraging news has helped the stock cross the record market capitalisation of Rs 11 trillion, experts say it has more legs to run as investors chase digital growth options. Sanjiv Bhasin, director at IIFL, says: “Globally, many people are unwilling to re-invest in China. So, India would see more flow, where RIL stands out given the improved return on equity and strong growth expectations.” He expects the stock to hit the Rs 2,000 per share level by March 2021, which denotes an upside of 14 per cent from the current levels.

RIL stands at number 57th position in the overall market capitalisation ranking of global listed companies. It ranked at 104 position as on March 24, 2020, Bloomberg data shows.

On Friday, Mukesh Ambani announced that Reliance Industries had become net debt-free after raising a record Rs 1.69 trillion from global investors and a rights issue in under two months.

The company raised Rs 1.15 trillion from global tech investors by selling little less than a quarter of the firm's digital arm, Jio Platforms, and another Rs 53,124.20 crore through a rights issue in the past 58 days.

Jio Platforms has raised Rs 1.15 trillion from leading global investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR, Mubadala, ADIA, TPG, L Catterton and PIF.

Analysts at Goldman Sachs believe the initial growth (operating profit growth to increase by 3 times over FY20-25) will be driven by margin improvement and private label contribution in the brick and mortar grocery business. It expects gains from JioMart to kick in after being a drag on profitability in the FY21-23 period as the company moves from being an offline market player (11,000 stores) to an integrated offline to online player powered by an e-commerce platform. Gaurav Dua, head capital market strategy at Sharekhan, believes that RIL will repeat the success story of Jio in the retail business as well. Further, given JioMart’s unique business model, it is well placed to face competition from online players, such as Amazon.