Reliance Industries ranked among Top 10 large-cap stocks globally
Climbs to 87th rank in enterprise value; outperforms leading US tech firms
The Reliance Industries (RIL) scrip has moved to be among the top 10 performing large-cap stocks globally. The spread of telecom service Jio’s reach and growing popularity has come in handy for the company known for its petrochemicals business.
According to an analyst report by HSBC Securities and Capital Markets (India), Jio is the only operator deploying three spectrum frequency bands, suggesting power costs may be on the higher side of the industry average. However, there is an offset as Jio has invested more on battery back-up and incumbents may save by asking tower companies to invest in solar/lithium batteries, going forward.
“Reported distribution costs by Jio suggest they are way lower versus incumbent telcos and may not be easy for incumbents to match… Jio also seems to have an advantage versus incumbents on data capacity and this may translate into Jio taking data marketshare, being better placed to upgrade to 5G
9 16 at lower capex, and with an ability to add revenues from digital advertising,” the report added.
M-cap vs enterprise value
Since May 2014, RIL’s share price has risen to ₹940.15 till Monday. This is a growth of 65 per cent, nearly doubling from ₹564. The phenomenal growth has led to RIL ranking at 109 among all companies with market capitalisation of more than $50 billion.
But, in terms of enterprise value, the company is ranked at 87 among its peers with a market capitalisation of over $50 billion.
This is boosted by RIL’s strengthening consumer base and the stock ranks ninth among its peers on year-to-date (YTD) returns. At a YTD performance of 73.6 per cent, only China Evergrande, Alibaba Group Holding, NVIDIA, Tencent Holdings, SK Hynix, Nintendo, PayPal and Applied Materials have outperformed the company.
Comparably, leading US tech companies rank considerably lower than RIL in YTD terms.
RIL’s petroleum downstream business is not performing badly either. According to a report by Edelweiss Securities, a robust petrochemicals business and new projects will revive earnings. The report said, “$20 billion capital expenditure has begun yielding results and will significantly uplift earnings… With mega core projects commissioning shortly, we expect RIL’s FCF (free cash flow) to turn around, RoE (return on equity) to increase and profit to double in five years.”