In a significant milestone for Indian markets, Reliance Industries Ltd (RIL), backed by Mukesh Ambani, surged past the Rs 20 lakh crore mark in market capitalisation (Mcap) on February 13, 2024, making it the first Indian company to achieve this feat. The company’s shares have seen a remarkable rally of over 14 per cent since the beginning of the year, contributing to this milestone. On February 13, the stock reached a fresh record high of Rs 2,957 on the BSE, marking an intraday gain of 1.8 per cent.
At 3.15 pm on Tuesday, shares of RIL were trading at Rs 2,928.15 apiece, up 0.87 per cent, on the BSE.
RIL has been on a trajectory of steady growth in market capitalisation over the years. It reached Rs 1 lakh crore in Mcap in August 2005, followed by Rs 2 lakh crore in April 2007, Rs 3 lakh crore in September 2007, and Rs 4 lakh crore in October 2007. Subsequently, it took 12 years to hit the Rs 5 lakh crore mark in July 2017. The company’s market value crossed Rs 10 lakh crore in November 2019 and Rs 15 lakh crore in September 2021, with the Rs 20-lakh-crore milestone achieved in over 600 days.
The surge in RIL stock price, which saw a 10.4 per cent increase in January and nearly 4 per cent climb in February, aligns with the broader market rally and positive evaluations from various brokerages.
Analysts have highlighted the potential benefits of higher oil prices for RIL’s oil-to-chemicals (O2C) businesses, albeit with concerns about potential disruptions such as increased logistics costs and shipping times. However, despite rising oil prices, oil marketing stocks haven’t exhibited the expected decline. There is anticipation regarding potential listings for retail or telecom, although no recent developments have been reported.
Several analysts remain optimistic about Reliance’s stock, citing the company’s controlled spending and robust performance in its retail sector during the third-quarter earnings. The 22 per cent on-quarter drop in Q3 capital expenditure to Rs 30,100 crore is attributed to reduced spending by Jio post the 5G rollout and limited retail expansion. This slowdown in capital expenditure, particularly as 5G deployment nears completion, is viewed positively by analysts. Despite a slight increase in net debt, the reduced capital expenditure and improved EBITDA run rate suggest favourable expectations for free cash flow in the next two years.