Reliance Industries among top 5 global firms to generate positive returns post March market mayhem

May 12, 2020 1:45 AM

Reliance Industries (RIL), India’s most valuable company by market capitalisation, is one of the best performing stocks globally after the market mayhem seen in March.

The stock of RIL was trading 0.8% higher on the Nifty and closed at Rs 1,575 a piece.The stock of RIL was trading 0.8% higher on the Nifty and closed at Rs 1,575 a piece.

By Urvashi Valecha

Reliance Industries (RIL), India’s most valuable company by market capitalisation, is one of the best performing stocks globally after the market mayhem seen in March. It is among top five companies globally in terms of dollar returns since March 20. According to market experts, there is more value to be unlocked for investors by the oil- to-retail conglomerate. In local currency, RIL’s shares have gained 78.4% in the last 30 trading sessions. The company has contributed to the pull-back rally that the Indian benchmarks witnessed in April. RIL, HDFC Bank and Infosys contributed 58% to the rise in the Sensex from its 52-week low on March 23.

RIL has delivered 53.2% returns in dollar terms since March 20 and has added a market cap of $46.35 billion during the same period. The returns are the fifth highest globally after Tesla, T-Mobile US, PayPal Holdings and Chevron Corp. Elon Musk’s Tesla and T-Mobile US have generated dollar returns worth 93.1% and 90.6%, respectively. The dollar returns of PayPal Holdings INC and Chevron Corp stood at 67.4% and 59.7%. This according to market experts shows that RIL has been able to re-align its business model with changing times.

Deepak Jasani, head of retail research, HDFC Securities, said, “Reliance Industries has managed to achieve this by changing its business model with time and shifted from depending heavily on oil and chemical businesses to depending on the telecom and retail businesses.”

In the last three weeks, RIL announced a number of deals, most notably the one with Facebook where the social media giant has agreed to buy a 9.99% stake in Jio Platforms, the conglomerate’s subsidiary. After this, US-based private equity firms Silver Lake and Vista Equity Partners announced that they would buy equity stake worth 1.15% and 2.32% in Jio Platforms.

Going ahead, RIL is going to open a rights issue on May 14. This according to the street is in line with the management’s vision to make RIL a net debt-free company by fiscal year 2021, which is boosting the sentiment towards the stock and has helped the conglomerate generate superior returns. The general consensus is that there is more value to be unlocked in the stock.

Sanjeev Hota, head of research, Sharekhan by BNP Paribas, said, “There is a lot more value to be unlocked in Reliance digital platform in the coming years. Further, potential value unlocking is also on cards in the Reliance Retail business. In near term, we may have another round of stake sale in Reliance Jio. Overall, we see huge potential for value unlocking in the next two to three years.”

RIL was the only Indian and non-American company to feature among the top 10 globally in terms of dollar returns since March 20. Listed entities that generated most returns after RIL were NVIDIA Corp, Home Depot, Broadcom, Facebook – Class A, and Exxon Mobil Corp. The stock of RIL was trading 0.8% higher on the Nifty and closed at Rs 1,575 a piece.

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