Billionaire Mukesh Ambani-owned Reliance Industries became the first Indian company to surpass market capitalisation of $200 billion on September 10. The oil to retail to telecom conglomerate now ranks 44th
in terms of valuations globally.
The company is now valued more than the combined market capitalisation of TCS, the largest Indian IT company (Rs 8,74,906.02 crore) and HDFC Bank, the largest Indian private sector lender (Rs 6,00,198.55 crore).
A recent spate of investment in its telecom and retail business has helped the company’s stock rise over 54 percent on a year-to-date basis and about 166 percent from its 2020 low of Rs 867.
After a few weeks of consolidation, the stock reverted to its previous uptrend rising over 7.10 percent to end at record closing high of Rs 2,314.65 per share on the BSE on September 10. It hit an intraday high of Rs 2,343.90 which is also its life-time high.
The price action of Thursday could be on media reports of RIL offering to sell $20 billion stake in its retail business to Amazon Inc. However, the company has not confirmed the report yet.
Silver Lake, which also has a stake in Jio Platforms, invested Rs 7,500 crore in Reliance Retail Ventures (RRVL) for a 1.75 percent equity stake, at an equity value of Rs 4.21 lakh crore. RRVL is also acquiring the retail & wholesale business and the logistics & warehousing business from the Future Group for Rs 24,713 crore.
RIL now ranks among companies such as Pfizer, AT&T, Intel Corp, Toyota Motor Corp, Coca-Cola, Netflix, Bank of America, PayPal Holdings, Adobe which have a market cap in the range of $201 to $230 billion.
Experts expect RIL to announce more investments in its retail business in the coming months which could drive the valuations even higher.
“We expect the company to attract further investments in the retail business from other investors which could lead to another round of rerating for the company. We remain positive on Reliance industries and expect that the digital and the retail business will be the future growth drivers for the company,” Jyoti Roy – DVP- Equity Strategist at Angel Broking told Moneycontrol.
“Further investments in the retail business and scaling up of Jio Mart business will be key triggers for the company in the near future. Listing of the digital and retail business over the next few years would also lead to significant value unlocking for shareholders in the long run,” said Roy.
After falling to multi-year lows in March, RIL made a quick turnaround in the following months with a host of investments coming in its telecom firm Jio Platforms. The investments form global players such as Facebook and Google along with its rights issue helped the company become net-debt free much ahead of its target of March next year.
Reliance is the only company from the Nifty50 universe that has rallied more than 150 percent from March lows and is also among top four companies (Tata Motors, M&M and Hindalco Industries) which doubled investors’ wealth.
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
News Source: Moneycontrol