RIL share price hits fresh 52-week high, market capitalisation inches closer to Rs 10 lakh crore mark

Reliance Industries share price gained for the second consecutive session today on likely tariff hike by its telecom arm Jio and foreign broking house Credit Suisse raising its target price. That brought market capitalisation of the Mukesh Ambani-led conglomerate closer to Rs 10 lakh crore mark, a first for any Indian company.

Reliance Industries share price rose 4.11% or 62 points to hit a fresh 52-week high of Rs 1,571 compared to the previous close of Rs 1509.80 on BSE. Today's rise in the stock brought Reliance Industries market capitalisation to Rs 9.91 lakh crore on BSE.

Also read: Reliance Industries overtakes BP Plc to become world's 6th largest oil company

TCS, its closest rival in terms of market capitalisation, recorded a m-cap of Rs 7.92 lakh crore on BSE. The IT firm's share price was trading 0.14% higher at Rs 2,111 on BSE.

Also read: Reliance Industries overtakes BP Plc to become world's 6th largest oil company

On Tuesday, Reliance Industries became the first Indian firm to cross the Rs 9.5 lakh crore market capitalisation mark.

Reliance Industries stock has gained 7.27% in last two days. The large cap stock has risen 37.26% during last one year and gained 39.41% since the beginning of this year.

Credit Suisse raised its target price to Rs 1,400 from Rs 1,210 citing likely tariff increase by Reliance Jio which could bring annual cash flow of $1.5 billion. This cash flow will help the firm achieve zero net debt target by FY21, the brokerage said.

It raised its FY20/21/22 earnings per share estimates by 15%, 12% and 20%, respectively. Several brokerages have become bullish on the Reliance Industries share price after the conglomerate announced its earnings for the quarter ended  September.

Reliance Industries' deal with Aramco: Mukesh Ambani wants chemicals to dominate Jamnagar refinery output

Earlier this month, UBS reiterated its 'Buy' call for RIL stock and increased the price target from  Rs 1,500 to  Rs 1,750.

UBS said plans to re-organise its investment in Reliance Jio Infocomm Ltd (RJIL) to make Jio a net debt-free company by the end of the current fiscal could unlock significant value for the conglomerate. In October end, Reliance Industries said it would set up a new unit to bring all its digital initiatives and apps under a single entity, and infuse Rs 1.08 lakh crore equity into this new unit.

The new structure will also create the largest digital services platform company in India. The new entity will continue to work on technologies in areas such as healthcare and education, while also looking at next-gen competencies such as artificial intelligence, Blockchain, virtual and augmented reality, among others.

Brokerage Bank of America Merrill Lynch has pegged market cap of RIL at $200 billion in 24 months.  Mukesh Ambani-led Reliance Industries is likely to become first Indian company to reach $200 billion market cap in 24 months backed by its new commerce venture and fixed broadband business, Bank of America Merrill Lynch (BofA-ML) said in a report in October.

Also read: Reliance, Amazon, Flipkart battle royale for digital dominance in India

The stock is likely to receive additional boost with several initiatives Reliance Industries has undertaken. New commerce initiative of empowering Kiranas in unorganised retail market by offering MPoS (mobile point-of-sale), entry into SME enterprise space with Microsoft, Jio's fiber broadband business and digital initiatives such as advertising could push the market capitalisation of the conglomerate to $200 billion, the brokerage said.

"We think the market is giving little credit to these initiatives given limited visibility," BofA-ML said. "We expect near-term momentum to be strong."

Reliance Industries reported a record net profit of Rs 11,262 crore for the quarter ended September 30, 2019 due to recovery in refining margins compared to consolidated net profit of Rs 9,516 crore in the same quarter last year.

RIL reported gross refining margins at $9.4 per barrel, the best in four quarters. Analysts had estimated RIL's GRM to come in at $9.5-$10.5 per barrel in Q2.

Gross refining margin is the difference between the total value of petroleum products coming out of an oil refinery (output) and the price of the raw material, (input) which is crude oil.

The Q2 earnings came above Bloomberg consensus estimates according to which the conglomerate was likely to report a 17 per cent rise in its consolidated net profit to Rs 11,158 crore. The conglomerate logged a 4.8 per cent rise in revenue to Rs 163,854 crore in Q2 against Rs 1,56,291 crore in the corresponding quarter, led by strong growth in retail and digital services businesses.

Profit before tax (PBT) rose 15.5 per cent to Rs 15,055 crore in  Q2 compared with Rs 13,198 crore in corresponding period of previous fiscal.

RIL logged operating profit (EBITDA) of Rs 23,169 crore in Q2 compared to Rs 21,641 crore in the corresponding period of the previous fiscal on strong operating performance in retail and digital services business.

Other income rose nearly three-fold to Rs 3,614 crore in Q2FY20 against Rs 1,250 crore in Q2FY19.

By Aseem Thapliyal