Reliance Industries Ltd achieved a significant milestone on February 13 by becoming India’s first company to surpass a market capitalization of Rs 20 lakh crore, propelled by a rally of over 14 percent in its shares since the beginning of 2024.
The company’s stock soared to a new all-time high of Rs 2,957 on the BSE and registered an intraday gain of 1.8 percent on February 13. By 11:16 am, the stock was trading at Rs 2,953, marking a 1.7 percent increase from its previous close.
Reliance Industries reached Rs 1 lakh crore in market cap in August 2005, 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 achieve Rs 5 lakh crore in July 2017, followed by Rs 10 lakh crore in November 2019, and Rs 15 lakh crore in September 2021. The journey to the Rs 20-lakh-crore milestone spanned over 600 days.
In January, the stock surged by 10.4 percent, followed by nearly 4 percent growth in February. These recent gains align with the broader market rally and positive assessments from multiple brokerages. While analysts acknowledge the potential benefits of higher oil prices for Reliance’s oil-to-chemicals (O2C) businesses, they also express concerns about potential disruptions, such as increased logistics costs and shipping times, with uncertain overall impacts.
Brokerage firm Bernstein forecasts robust 20 percent CAGR in EPS growth until the end of FY26, driven by the retail and telecom sectors. They anticipate a focus on telecom monetization post the 5G rollout, with Jio expected to achieve a 15 percent CAGR revenue growth over the next three years. Additionally, Jio’s market share is projected to reach 47 percent by FY25, driven by a subscriber base of 500 million and an over 11 percent tariff hike in FY25. Retail is also on a strong growth trajectory, with a 24 percent year-on-year increase, sustained by store expansion and increased e-commerce.
Analysts highlight key catalysts for investors, including potential spin-offs post the India election, higher telecom tariff rates, announcements in the new energy sector, and improved free cash flow post-5G infrastructure build-out.
Despite a slight increase in net debt, analysts are optimistic about the stock due to Reliance’s prudent spending approach and robust retail performance in Q3 earnings. The 22 percent quarter-on-quarter drop in Q3 capital expenditure to Rs 30,100 crore is seen positively, attributed to reduced spending by Jio post the 5G rollout and limited retail expansion. This slowdown in capex, as 5G deployment nears completion, is viewed favorably by analysts, suggesting favorable free cash flow expectations for the next two years.
