Reliance Industries bucked the trend on Wednesday, as the company’s market capitalisation briefly hit the
19-trillion mark in intra-day trade. The conglomerate became the first Indian company to achieve the feat. Analysts attribute the surge in Singapore GRM as the main reason for the extended rally in company’s share other than hikes in telecom tariffs and gaining market share in its retail business. Shares of RIL surged 3.1% over the last two sessions, adding its year-to-date gains to 17.3%. On Wednesday, the stock hit a life-time high of2,777.90 whereas the Sensex closed 0.94% lower at 56,819.39. The company is now accounts for 16.4% of the Sensex’s market cap and almost equal to the market cap of the bottom 12 Sensex companies put together.
The conglomerate’s revenues for the current year are expected to come in at close to
7.5 trillion , a big jump over4.66 lakh crore reported in FY22. The operating profits are estimated to nudge
1.5 trillion while the net profits could top60,000 crore, compared with FY22’s
49,128 crore. Analysts at JP Morgan recently observed the sharp surge in diesel cracks would boost refining profits for the company while offsetting the weaknesses in the petrochemicals business. Goldman Sachs wrote that refining tailwinds should sustain given the improved supply, demand from closures and from jet fuel, lower Chinese exports, low inventory and also supply disruption. “We forecast GRM to improve from $9.0/bbl in FY22E to $14.3/11.0 per bbl in FY23/24E at a premium to industry benchmark GRM,” analyst at the firm observed.The brokerage estimates a compounded growth of 35% in earnings over FY21-24 and has a 12-month price target of3,200 per share.
Morgan Stanley believes the recommendations for the auction of 5G spectrum, announced by the telecom regulator, would mean lower spectrum costs and easier rollout obligations which would reduce the need for RIL to leverage too much.