Reliance Industries Ltd becomes India's first to surpass Rs 20 lakh crore in market capitalisation

Reliance Industries Ltd became India’s first company to surpass Rs 20 lakh crore in market capitalisation on Tuesday, after shares of Mukesh Ambani-backed firm rallied over 14 per cent till date in 2024.

Reliance Industries Ltd stock hit a new record high of Rs 2,957 on the BSE and rose as much as 1.8 per cent intraday on 13 February.

At 02.19 pm, the stock was trading at Rs 2,925, up 0.76 per cent from its previous close.

Milestone achieved in over 600 days

In August 2005, the conglomerate reached Rs 1 lakh crore in market cap, it reached Rs 2 lakh crore in April 2007, Rs 3 lakh crore in September 2007, and Rs 4 lakh crore in October 2007.

The company then took 12 years to reach Rs 5 lakh crore that happened in July 2017. The market value reached Rs 10 lakh crore in November 2019 and Rs 15 lakh crore in September 2021.

The Rs 20-lakh-crore milestone was achieved in over 600 days.

In January 2024, Reliance Industry Ltd stock surged 10.4 per cent and continued its upward movement, rising nearly 4 per cent in February.

Reason for surge

These recent gains are consistent with the overall market rally and positive reports on the company from multiple brokerages.

Projection for Reliance stocks

Analysts acknowledge the theoretical benefits of higher oil prices for RIL’s oil-to-chemicals (O2C) businesses, but express concerns about potential disruptions, including increased logistics costs and shipping times. The overall impact is uncertain. Despite rising oil prices, oil marketing stocks haven’t declined as expected.

Brokerage Bernstein expects a whopping 20 per cent CAGR in EPS growth until the end of FY26, driven by retail and telecom sectors. The telecom focus will shift to monetisation after the 5G rollout, with a 15 per cent CAGR revenue growth expected for Jio in the next three years.

Jio’s market share is projected to reach 47 per cent by FY25, fuelled by 500 million subscribers and an over 11 per cent tariff hike in FY25. Retail is on a strong growth trajectory, showing a 24 per cent on-year increase, sustainable through store expansion and increased e-commerce. The company’s oil-to-chemical earnings may remain flat on stagnant volume growth and marginal improvements in chemicals. E&P volumes are expected to peak in the next 12 months, with future growth driven by solar and battery capacity expansion, the Bernstein report added.

Analysts said investors can expect key catalysts, including spin-offs after the India election, higher telecom tariff rates, announcements in the new energy sector, and improved free cash flow post-5G infrastructure build-out.

Also, many of the analysts are optimistic about the stock due to RIL’s positive stance on controlled spending and robust retail performance in Q3 earnings. The 22 per cent on-quarter drop in Q3 capital expenditure to Rs 30,100 crore is attributed to decreased spending by Jio after the 5G rollout and limited retail expansion. The capex slowdown, as 5G deployment nears completion, is viewed positively by analysts. Despite a slight increase in net debt, the reduced capex and improved EBITDA run rate suggest favorable free cash flow expectations for the next two years.

With inputs from Moneycontrol.com

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