RIL m-cap nears Rs 19-trillion mark; stock surges 10% in 3 days

According to the BSE data, RIL m-cap stood at Rs 18.84 trillion at 01:16 PM, just a per cent away to claim the Rs 19 trillion feat.

Mukesh Ambani-led Reliance Industries (RIL) is set to become India's first company to hit market capitalisation (m-cap) of Rs 19 trillion after a strong rally over the past three trading days. RIL's m-cap hit Rs 18.85 trillion intra-day today after the stock price of the company touched a new high of Rs 2,787.10. The stock surpassed its previous high of Rs 2,750 that it touched on October 19, 2021.

According to the BSE data, RIL m-cap stood at Rs 18.84 trillion at 01:16 PM, just a per cent away from the Rs 19-trillion feat. In the past three trading days, RIL's m-cap has zoomed Rs 1.64 trillion after the stock rallied 10 per cent since Monday, April 18, 2022.

RIL is one of India's biggest conglomerates with a presence in refining or marketing petrochemicals (O2C), oil and gas exploration, retail, digital services and media, making it a well-diversified business entity. In April-December period (9MFY22), O2C and oil and gas contributed 50 per cent to the EBITDA level whereas retail, digital and others contributed 10 per cent, 34 per cent and 6 per cent, respectively.

Analysts at Morgan Stanley, on Wednesday, riased their target price on the stock to Rs 3,253 on the back of new-energy boost.

"We estimate tightness in the gas and fuel refining markets will fund nearly half of RIL's new energy capex over the next three years as refining margins and gas prices stay above mid-cycle levels," it said in its report.

It further added: We expect up to a 10 per cent boost to RIL's NAV in anticipation of quicker hydrogen monetization – quite similar to its digital and retail NAVs over the past decade, which were discounted 3-4 years ahead  of their actual earnings contribution.

"We also estimate hydrogen can achieve a 14-15 per cent ROCE for RIL on a through-cycle basis – on par with its highly profitable oil-to-chemicals operation. As  the green hydrogen ecosystem is rolled out, it will also raise demand for RIL's solar panel," it added.

Those at ICICI Securities, meanwhile, believe the long-term prospects and dominant standing of RIL in each of its product & service portfolio provide comfort for long term value creation. "RIL's consumer business will be the growth driver going ahead. The company has a strong balance sheet post fund raising while its traditional business will continue to generate steady cash flows," the brokerage firm added.. 

Goldman Sachs, too, expects the conglomerate's strong cash flow will drive capex of new energy business. "RIL's strong cash flow generation in the 'best in class' old energy business can fund the capex of the new energy business and in turn drive one of the fastest and most profitable net-zero transitions by 2035 amongst large energy companies," the brokerage firm added.

In 2020, RIL's chairman and billionaire Mukesh Ambani had set 2035 target for Reliance, which operates the world's largest single-location oil refining complex with an array of petrochemical units, to turn net carbon zero by 2035. CLICK HERE FOR FULL REPORT