Reliance Industries became India’s first company in the country to hit a market capitalisation of ₹9-lakh crore. Expectations around the company’s telecom operations and bullish sentiment given the company’s impending stake-sale deal with the world’s largest oil company Saudi Aramco have been driving the stock over the past few weeks.
Tata Consultancy Services (TCS), India’s largest IT company, is the second most valued in the stock market having reached a capitalisation of ₹8.61-lakh crore. HDFC Bank’s m-cap stood at around ₹7-lakh crore, making it the third most valued company.
The rising of more than 2 percent ahead of their September quarter numbers to be announced late on October 18. In August, RIL was downgraded by Credit Suisse with a price target of ₹995 on the back of higher leverage worries. But the stock has seen a stellar rise in its price and touched a high of ₹1,428. The rise has been largely driven by the company’s efforts to become debt-free by March 31, 2021.
Recently, RIL had announced sale of 20 per cent stake in its oil-to-chemicals business to Saudi Aramco at an enterprise value of $75 billion, making it one of the biggest foreign direct investment (FDI) deals in the country.
It also announced a deal with BP, wherein the UK-based company will acquire 49 per cent stake in RIL’s retail distribution business. The commitments from these two transactions are about ₹1.1-lakh crore.
RIL had ended last year with net debt of ₹1,54,478 crore. On the telecom front, Reliance Jio has announced entry into the fixed broadband segment even as it increased tariffs for mobile voice calls.
As the stock continued its rally post these announcements, Bank of America Merrill Lynch (BoFAML), on October 16, said that in the next 24 months, RIL can become India’s first company to reach the $200-billion market-cap milestone. To achieve this target, the market-cap of RIL to rise to around ₹14-lakh crore, a near 50 per cent rise in the stock price from the current levels.