Reliance Industries rally even with COVID-19
Reliance Industries Limited, led by Mukesh Ambani, is one of the only companies that has made the most of the opportunity even in COVID-19. The market capitalization of the company stands at Rs 15.29 trillion or $207 billion.
The COVID-19 triggered sell-off period saw its market capitalization fall to around Rs 5.39 trillion. But today, it has risen to almost three times. 2020 saw the shares of RIL go as low as Rs 867 per piece but it has zoomed around 166%.
Even the valuation of TCS and HDFC together is less than that of RIL.
It has also become the first Indian company to cross the USD 200 billion benchmark in valuation. It is currently the 44th largest company in the world.
The company also uplifted the market sentiments while trying to unlock the value for the company. RIL revived the investment sentiments while they were at low.
More than 10 investors together invested around Rs 1.20 trillion in Jio. Jio also got approximately Rs 53,124 crore from a rights issue and RS 7500 crore from selling the Reliance Retail’s stake to Silver Lake.
By unlocking its value, the company has become debt-free. An analyst, however, stated that the only trouble is that the company is overvalued. The valuation will further rise as the company is talking to Amazon, KKR & Co for investment in retail business.
Even when Nifty moved up by 33%, RIL moved up by 111%. The past six months saw NIFTY50 move consistently upward across sectors and stocks.
“No doubt, Reliance is one of the largest gainers in index heavyweights but we have witnessed sharp upwards trends in IT, Autos, Pharma, Metals, and high-quality NBFC’s and consumer sectors over the same period.” a Senior Research Analyst at Reliance Securities, Vikas Jain said.
The banking sector is also performing strongly by raising the capitals in the form of QIP over the past few months. According to Jain, the valuations of these banks are trading below the long-term average. They have the potential to rise 20-30% in the next few quarters.