Reliance Industries (RIL), which was less than half the size of all state-owned listed firms put together at the beginning of the year, has now surpassed the combined market valuation of these behemoths. Shares of the country’s most valuable company have risen 54.6% since January 2020, following its fundraising spree for its digital and retail arms.
The cumulative market capitalisation of 83 public sector undertakings (PSUs) as of Tuesday stood at Rs 15.16 lakh crore, while in contrast, the RIL alone commands a market valuation of Rs 15.30 lakh crore, Bloomberg data showed. At the start of the year, PSUs had a market capitalisation (m-cap) of Rs 19.3 lakh crore whereas RIL had a market cap of Rs 9.6 lakh crore.
RIL, which has raised $33 billion of equity capital in the past six months, has more-than doubled its investors wealth compared to 15.7% gains clocked by the benchmark Nifty50 in the last six months. As of Tuesday’s close, RIL’s market capitalisation was $207.88 billion, which is about 10% of all the companies listed on the Indian bourses. India –the tenth largest equity market in the world has a market valuation of $2.11 trillion, Bloomberg data shows.
Kotak Institutional Equities believes, RIL enjoys multiple factors such as dominant and growing presence in several sectors, large weight in all benchmark indices and large outperformance. “In our view, valuations are less important except at extremes for certain stocks,” the brokerage said in a note to investors.
It also observed that things that are relevant for investor to appreciate are: Capital, execution and scale that result in dominance.
While the largest state-owned firm —State Bank of India — commands a market capitalisation of Rs 1.79 lakh crore, Tata Consultancy Services (TCS) is a distant second, with an m-cap of Rs 9.35 lakh crore.
The surge in RIL share prices also propelled promoter Mukesh Ambani’s net worth to $88.4 billion to become the sixth richest person in the world. At the end of June 2020, promoter group held 50.37% of the company.
During the year 2007, the market capitalisation of RIL swelled from $50 billion to $100 billion over a span of six months. However, the stock was largely an underperformer since then and uptick again started about three years ago.