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RIL m-cap surges Rs 3.9 lakh crore in 11 weeks; target seen at Rs 2,000 by December –

Reliance Industries (RIL) shares breached Rs 11.7 lakh crore market capitalisation-mark on July 6 as the stock climbed 3.57 percent to close at Rs 1,851.40 on BSE.

On July 6, the m-cap of the stock stood at Rs 11,73,677.35 crore on BSE.

On April 22, when the company announced Facebook’s Rs 43,574-crore investment in Jio Platforms for a 9.99 percent stake, the m-cap was Rs 7.83 lakh crore. In just 11 weeks, the stock’s m-cap surged by over Rs 3.9 lakh crore.

At a time when the coronavirus pandemic has hit businesses hard, RIL has remained resilient and became debt-free much ahead of its March 2021 target.

Mukesh Ambani-owned Reliance Industries is the only Indian company to feature on a list of businesses that prospered during the coronavirus enforced lockdown.

A list of top 100 companies by London’ Financial Times ranked Mumbai-based RIL at 89. The publication ranked companies based on resilience during the pandemic.

The company has raised a combined Rs 117,588.45 crore from some of the world’s leading tech investors led by Facebook for a stake in its digital arm, Jio Platforms.

The company’s last deal was with chipmaker Intel for a 0.39 percent stake, valued at Rs 1,894.5 crore.

This was Jio’s twelfth deal in 11 weeks, following investments from Facebook Inc, General Atlantic, Silver Lake, Vista Equity Partners, KKR and Mubadala Investment Company, ADIA, TPG Capital, L Catterton and PIF.

The Intel deal took to 25.09 percent the stake that Reliance has sold in Jio Platforms.

Read more: Jio Platforms: From Facebook to Intel, here’s a fact-box of the 12 deals so far

In the last three months, the stock has witnessed healthy traction because of the positive news around several deals and the company being debt-free.

On June 19, the company said it was debt-free and had raised over Rs 1.68 lakh crore in just 58 days.

In 2020, the stock is up 20 percent against a 12 percent fall in the benchmark Sensex.

Sanjiv Bhasin, Director, IIFL Securities, is of the view that a large part of these developments had already played out but for those still looking for outperformance, Reliance was the pick.

Most experts believe the stock can touch Rs 2,000-mark by the end of the year and has the potential for re-rating.

Stock market expert SP Tulsian of told CNBC-TV18 that the stock may see a big re-rating.

Deven Choksey of KRChoksey Securities, in an interview with CNBC-TV18, said the same, foreseeing the year-end price of the stock over Rs 2,000.

The rise of stock will heavily depend on the Jio Platforms.

Reliance Industries was no longer an energy play but a technology play and the market cap of Rs 12 lakh crore by the end of the year was on the cards, Bhasin said.

“The stock is in a very sweet spot. Data is the new gold and that will continue to play for some time. Our Diwali target for the stock remains at Rs 2,000,” he said.

Jio Platforms, he said, may get listed outside India to fetch better valuation but that will happen when the market will seem to have accepted it.

“Right now, they will wait for stability and will concentrate on garnering more market share and increasing the ARPU. By March 2021, there will be time for a good listing of Jio Platforms,” Bhasin said.

Shankar Sharma, Vice-Chairman and joint MD of First Global told CNBC-TV18 that the valuation of Jio was low and unjustified and it deserved a valuation of about half-a-trillion dollar.

“My personal view is that $60-65 billion for a business of this size and scale that Jio is, and $50-60 billion have been invested in it in the last 9-10 years, a $60-65 billion valuation is nothing at all. Jio should get a valuation that is closer to half-a-trillion,” Sharma said.

Amar Deo Singh, Head-Advisory of Angel Broking is bullish on Reliance.

“With the possibility of the JIO platform getting listed abroad not ruled in the future, the exciting times of Reliance are here to stay. The stock, after making a low of Rs 867.82 on March 23, 2020, has jumped a spectacular 113 percent in three months. Stay invested in Reliance,” Singh said.

“In the last three months, several deals were struck and the company became debt-free, leading to a significant increase in investor appetite for the stock coupled with re-rating by many brokerage firms. Now, Reliance is no longer an energy play but has become a tech play, with data becoming the new oil. Also, with the breakneck pace of digitalization post-COVID-19, Reliance becomes a major beneficiary, well poised to capture a significant pie of the online business,” said Singh.

Singh believes the further rise of the stock will depend heavily on the performance of the JIO platform.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

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