Ahead of its first online 43rd Annual General Meeting on Wednesday where its chairman Mukesh Ambani is expected to lay down his vision for the groups businesses going forward, the shares of Reliance Industries Ltd on Monday jumped 3 per cent to close at Rs 1,934 taking its market cap at Rs 12.7 lakh crore or $170 billion (including the partly paid shares). At the current market cap, RIL is now the 51st most valued company in the world. TCS is the only other Indian company in the list of top 100 most valued companies in the world as it occupied the 99th spot with a market cap of Rs 832,860 crore or $111 billion.
Between April 1 and July 13, RIL has gained $81 billion in market capitalisation and has climbed 47 places from being the 98th most valued company on April 1 to 51st most value company now.
The share price of RIL has risen by 120 per cent over the last four months for Rs 883 per share on March 23, 2020 to Rs 1,939 on Monday. Since April 22 when Facebook Inc announced investment of Rs 43,574 crore in Jio Platforms for 9.99 per cent equity stake, Jio Platforms has announced investments by 12 other investors since then. The total investment by these 13 investors over the last 12-weeks amounted to Rs 118,318 crore. Besides, RIL also raised Rs 53,124 crore through its rights issue that concluded in the first week of June.
In a very select list
At the current market cap, RIL is now the 51st most valued company in the world. TCS is the only other Indian company in the list of top 100 most valued companies in the world.
In June, the company also announced that it has become net debt free ahead of the March 2021 target following fund raising through Rights issue and stake sale in Jio Platforms. “As RIL has achieved a decent foothold in both digital services and organized retail, we believe it would now turn its focus to the ‘oil-to-chemicals’ project, for which it has signed an MoU with Saudi Aramco,” said an analyst with Motilal Oswal Institutional Equities.
In a report released on Monday, Credit Suisse increased Jio’s enterprise value to $88.5 bn. While it maintained a neutral stance on RIL’s share price and maintained a 12 month target of Rs 1,690 per share, it said that its blue sky scenario (removing the limiting clouds) for RIL is Rs 2,300 per share with Jio’s EV at $110 billion.
“Blue sky builds in positive outcome on Aramco deal in energy vertical at EV of $75 bn; Jio’s steady state ARPU increasing to Rs 250 (base case: Rs 200); grocery distribution through kirana stores and monetising customer shopping data through advertisements, and synergies from potential acquisition of Future Retail and Future Lifestyle,” said the Credit Suisse report.
The report however, in its grey sky scenario projected a target price of Rs 1,295 over the next 12 months. Some of the key risks that the report pointed were — weak traction in non-wireless verticals of Jio; sustained weakness in refining and petrochemical cycle; increase in Jio’s wireless subscribers to only 500 mn (vs base case of 550mn), steady state ARPU of Rs 200, and growth in retail slowing down to low teens. It also said that its target price currently does not assign upside for the new commerce initiative of Reliance retail as the onboarding of kirana stores has been slower than expected.
Moreover, lockdown has already taken a toll on retail and oil companies. “We estimate RIL to report weak O2C (oil-to-chemcials) and retail performance, though Jio should be better. Lube sector could witness a 40-50 per cent volume hit,” said a report from Emkay Global Financial Services.
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