Reliance Industries, the conglomerate led by India’s richest man Mukesh Ambani, has been on a stellar run in the stock market. The company’s share price has surged over 40% in the past year, reaching an all-time high of Rs 2,800 on Monday. With its market capitalisation crossing Rs 19 lakh crore, Reliance Industries is the most valued company in the Indian stock market, accounting for over 11% of the total market cap.
Investor Sentiment and Expert Views
Institutional investors have shown significant interest in Reliance, with some holding 7% to 9% of their holdings in the company. Market experts have also weighed in on the stock’s potential, with Prakash Diwan highlighting the robustness of Reliance’s retail and Jio businesses, which are expected to drive future growth.
Market Performance and Outlook
Reliance Industries has consistently delivered positive returns, with its shares gaining 11.5% in 2023, largely due to the substantial surge witnessed in November and December. The company’s stock has been on an upward trajectory since the beginning of the year, rising by 10% in the current month.
Several brokerages, including Morgan Stanley, Jefferies, and Emkay Global, have shared optimistic reviews about RIL’s stock, further underpinning the positive market sentiment.
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The factors behind Reliance Industries record-breaking share price surge
There are several factors that have contributed to the phenomenal rise of Reliance share price. Some of the key drivers are:
Diversification and digital transformation: Reliance Industries has successfully diversified its business portfolio from being a predominantly oil and petrochemicals player to a leader in telecom, retail, and digital services.
The company’s digital arm, Jio Platforms, has attracted over Rs 1.5 lakh crore of investments from global giants like Facebook, Google, Intel, Qualcomm, and others in the past year.
Jio Platforms has also launched its own 5G network, cloud computing, e-commerce, and online education services, among others. Reliance Retail, the largest retailer in India, has also expanded its presence in the online space, acquiring e-grocer Netmeds, online furniture seller Urban Ladder, and online fashion platform Myntra. Reliance Industries has also announced its plans to enter the green energy sector, with an investment of Rs 75,000 crore over the next three years.
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Strong financial performance: Reliance Industries has delivered robust financial results in the past few quarters, despite the challenges posed by the Covid-19 pandemic. The company reported a consolidated net profit of Rs 13,101 crore for the quarter ended December 31, 2020, up 12.5% year-on-year.
The company’s revenue from operations stood at Rs 1.23 lakh crore, up 6.7% year-on-year. The company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin improved to 19.4%, up 260 basis points year-on-year. The company’s cash flow from operations also increased to Rs 26,995 crore, up 88.8% year-on-year.
Debt reduction and value unlocking: Reliance Industries has achieved its target of becoming net debt-free by March 2021, ahead of its schedule. The company has reduced its net debt from Rs 1.61 lakh crore as of March 31, 2020, to Rs 38,021 crore as of December 31, 2020, thanks to the stake sales in Jio Platforms and Reliance Retail, and the rights issue of Rs 53,124 crore.
The company has also announced its intention to carve out its oil-to-chemicals (O2C) business into a separate entity, which will enable it to attract strategic partners and investors, and unlock value for its shareholders.
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In conclusion, Reliance Industries’ attainment of a record market capitalization of ₹19.5 lakh crore reflects the company’s strong performance across its various business segments and the favorable outlook for its future growth and profitability.
Last Updated on 1 year
