RIL first Indian company to cross ₹ 8 trillion market cap

Mumbai: The Mukesh Ambani-led Reliance Industries Ltd (RIL) today become the first Indian company to cross ₹ 8 trillion market capitalization after its shares surged nearly 38% this year. RIL share prices rose 1.86% to close at a record high of ₹ 1,269.70 on BSE, pegging its market cap at ₹ 8.05 trillion after data from the Telecom Regulatory Authority of India (Trai) showed Reliance Jio continued to add subscribers at a healthy pace. India’s benchmark Sensex Index rose 0.13% to 38,336.76 points.

Investors continued to buy RIL shares on expectation of additional revenue from Reliance JioGigaFiber, the telecom firm’s broadband service, and Jio Phone 2. A higher subscription base and attractive tariff plans are also seen as bolstering margins.

Analysts also expect strong earnings growth momentum, courtesy the newly commissioned refinery off-gas cracker and ramp-up of RIL’s petcoke gasification project. RIL’s June quarter results, which showed gradual improvement in the telecom and retail financials, also cheered investors.

In July, Reliance Jio reported a profit of ₹ 612 crore for the June quarter, a 19.9% rise on a sequential basis, on revenue of ₹ 8,109 crore from its operations. Reliance Jio had reported a net profit of ₹ 510 crore on revenue of ₹ 7,128 crore during the March quarter. Organized retail reported a 123.7% rise in revenue, at ₹ 25,890 crore for the quarter, backed by rapid store expansion.

“We value RIL’s retail business at F20e EV/sales of 0.8x. This is in line with the average of the two comparable listed retail players, Future Retail Ltd and Shoppers Stop Ltd (both based on Bloomberg consensus estimates),” said Morgan Stanley in a 16 August report. “We value telecom investments at a target EV/IC multiple of 0.97x. Our target multiple is based on valuing Jio’s F21e EBITDA at an EV/EBITDA multiple of 7.5x and discounting it back using a discount rate of 12%. Our 7.5x multiple is in line with where Bharti Airtel and Idea are currently trading, based on Bloomberg consensus estimates.”

According to Trai data, Reliance Jio added 9.71 million users in June, taking its subscriber base well past 215 million. It also recorded market share gain to 18.78% from 18.7% a month ago.

“Jio continued to show strong subscriber momentum, in line with our expectation. However, flattish sequential ARPU despite cashback offers and changes to prime membership are surprises. The focus remains on onboarding more subscribers and driving engagement; price increase appears less of a focus for now,” an analyst said on condition of anonymity.