On Wednesday, Mukesh Ambani-led Reliance Industries Ltd is named one of the top 50 most valuable publicly trading companies in the world after raising its stake since mid-March. The increase in the market value of the oil-to-telecom group which is driven by its telecom and retail businesses.
The stock was trading at a high record of ₹1959.45 on the Bombay Stock Exchange, up 2.2% from its previous close. The stock market value was about $170.36 billion on Wednesday, according to Bloomberg data.
The market value of this scrip is now higher than ASML Holding NV, Abbvie Inc, Abbott labs. Saudi Aramco is the world’s most valuable company with $1.78 trillion market value, followed by Amazon.Com Inc with $1.60 trillion, Apple Inc. with $1.66 trillion, Microsoft Corp with $1.62 trillion, and the Alphabet Inc. with $1.05 trillion.
In 2014, RIL expressed its desire to be one of the top 50 companies in the world by 2017. “Over the next three years, the launch of each of our major petrochemicals and refining projects, the strengthening of the retail business and the launch of our Jio business will bring us closer to our dream of becoming a Fortune 50 company because we complete 40 years of our companies’ journey”, Chairman and managing director of RIL, Mukesh Ambani said.
The street, which looks 43rd AGM of RIL, is fully awaiting the clarification on its oil and chemical deal with Saudi Aramco and an update on JioMart.
In terms of global oil and gas companies, Reliance Industry ranks third according to its market capitalization after Saudi Arabia and Exxon Mobil. Saudi Aramco continues on top of the list, followed by Exxon Mobil with a market value of about $ 180.33 billion.
Shares have risen more than 120% since mid-March. So far this year, after selling a 25.24% stake in Jio Platforms to Facebook, KKR, Silver Lake, L. Catterton, General Atlantic, TPG, Vista stock partners, Abu Dhabi Investment Institute, Mobadella Investment company, Public Investment Fund (PIF), Intel Investment and Qualcomm Ventures Investment, it has gained 26%. The company has so far raised 118,318.45 crore rupees from the sale of shares.
Besides this, RIL has become the most expensive energy company among the world’s top peers over the past few weeks following a sharp rise in share prices as investors have rewarded its hard work by reducing debt to zero ahead of schedule.
At current market value, RIL, with 24.4 times its one-year forward revenue, is almost double its long-term average. According to the business report, its trailing price-earnings is multiple of 30.7 compared to the average P / E of 13 for the world’s oil giants.
RIL parent has also raised Rs. 53,124 crores through a rights issue. Its net debt as of March 31, 2020, was ₹1.61 trillion. The company on 19 June announced that with these investments it is now a net debt-free company.
Credit Suisse told its investors in a report that we now value Jio’s non-wireless verticals which includes education, agri-tech, health, home broadband, Internet of Things (IoT), and Jio’s app suite, enterprise services, given that there is the most significant progress in many of them and the possibility of aggressive customer ramp-up enable by the recent relevant deleveraged.
The refining and marketing segment of the reliance industry provides 51.16% to the company’s revenue, while its petrochemicals unit accounts for 22.35%. The share of organized retail at the revenue pie is 17.1%, while digital commerce is 6% and exploration and production with 0.66% on 31st March.
RIL stocks are being re-rated as oil prices fall, which is an exception in the energy space. It is worth noting here that the share of businesses facing consumers, which includes telecommunications and retail, in operating profit in March 2020 rose to 38.6%, as a profit of 219 basis points, respectively. This has bolstered the group’s consolidated revenue.
According to Analysts, on the energy front, a rising focus on improving the proportion of the petrochemicals division in the revenue will help RIL alleviate the uncertainty of lower petroleum product demand in the future due to the rising share of renewable energy.
RIL shares closed 0.93% lower at Rs 1,917 each on the Bombay Stock Exchange on Tuesday. The stock has rebounded more than 110% from its March lows.