Reliance In­dus­tries ranked among Top 10 large-cap stocks glob­ally

Climbs to 87th rank in en­ter­prise value; out­per­forms lead­ing US tech firms

The Hindu Business Line - - MARKET WATCH -

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.”

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