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RIL now accounts for 10% of all BSE-listed companies' combined market cap

RIL Chairman Mukesh Ambani
Reliance Industries (RIL) has dominated the Indian equity markets with its share in the total market capitalisation (market-cap) of all BSE listed companies nearly doubling in the past two years. Mukesh Ambani-controlled company saw its combined market-cap (partly and fully paid shares) hitting the Rs 14.38 trillion mark at the bourses on Monday. With this, RIL accounted for 9.8 per cent of the total market-cap of BSE listed companies of Rs 147.23 trillion.

Thus far in the calendar year 2020 (CY20), RIL’s market-cap has surged 49.8 per cent, or Rs 4.77 trillion, from Rs 9.59 trillion on December 31, 2019. In comparison, the S&P BSE Sensex has lost 7.7 per cent so far in CY20 with the combined market-cap of listed companies slipping 5.3 per cent during this period.

On December 31, 2014, RIL accounted for 2.9 per cent of the total BSE listed companies market-cap of Rs 98.36 trillion. Since then, the company’s market-cap jumped nearly five-fold from Rs 2.88 trillion. With the stock more than doubling since its March 2020 lows, RIL has further fortified its position in the S&P BSE Sensex with the counter now accounting for nearly 16.7 per cent of the index’s weight. In CY20 beginning, its weight in the Sensex was 10.8 per cent

More headroom

Despite its recent run, analysts at BNP Paribas believe, RIL still has multiple catalysts in place in terms of a stake sale in its retail venture and a potential sale in oil-to-chemicals (O2C) business segment even at a lower valuation.

“We believe FY22 will see a rebound in refining/chemical margins which will aid earnings as global growth stabilises. We expect refining margins of $9.5/barrel for FY22 and increasing for FY23 as – after a transitionary FY22 – growth should return for both gasoline / jet fuel. Chemical business should be more stable going into FY22 and as global economies revive should once again see improving spreads,” wrote Amit Shah, an analyst tracking the company at BNP Paribas in a July 24 note, while maintaining the target price at Rs 2,317.

Over the past four months, Jio Platforms, a subsidiary of RIL in the telecom venture has raised Rs 152,056 crore (about $20.2 billion) from a dozen marquee global investors by selling about 33 per cent stake in the firm. In the process, RIL has become the zero net debt company, after it cumulatively raised a total of Rs 212,809 crore through rights issue, the combined investments in Jio Platforms, and investment by BP. The company’s net debt was Rs 161,035 crore at the end of FY19-20.

Over the last three years, RIL’s stock performance has been outstanding. In 2017/18/19, the stock rallied 70 / 22 / 38 per cent, respectively versus the Nifty's rise of 19 / 3 / 12 per cent during this period. Driven by continued strong performance, since end-2014, RIL is up 4.1 times versus the Nifty’s modest rise of 30 per cent, suggests a Nomura's July 16 report. While the run has been very strong, and valuations are getting rich, Nomura still believes the outperformance may sustain.

“The outlook for Jio has improved significantly with a large stake sale and strategic tie-ups with Facebook and Google; accordingly, we raise our EV/EBITDA multiple for Jio to 11x (9x earlier). We also roll forward our SOTP valuation to Sep-22F (from Mar-22F earlier). We raise our target price to Rs 2,200. The stock currently trades at 14.9x FY23F P/E. Reiterate Buy. RIL is our preferred pick in India oil & gas,” wrote Anil Sharma and Aditya Bansal of Nomura in a July 16 report.

Year RIL Market-cap in Rs crore % share#
2013 289132 4.1
2014 288293 2.9
2015 328003 3.3
2016 350341 3.3
2017 583347 3.8
2018 710585 4.9
2019 959819 6.2
2020* 1437621 9.8
     
* as on July 27, 2020 at 01:43 pm.
# % share of market capitalization of BSE listed companies
Source: BSE/CaptialinePlus  
Data compiled by BS Research  



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