Reliance Industries Ltd today surpassed Tata Consultancy Services to briefly become India’s most valuable company once again, aided by a sustained rise in share prices over the last two months and a constantly falling share prices of the Tata group technology giant.
Shares of Mukesh Ambani-controlled Reliance Industries rose to the day’s high of Rs 1,410 on BSE, up 1.4% from the previous close. While, Tata Consultancy Services’ shares fell marginally by 0.25% to Rs 2315.15 ahead of its fiscal fourth quarter and full-year earnings announcement later today. At the currency prices, Reliance Industries’ market cap at Rs 4.57 lakh crore is flirting with that of Tata Consultancy Services.
Jio creates value for RIL
The petrochemicals-to-petroleum-to-retail-to-telecom giant Reliance Industries’ shares are on a sustained rise on the prospects of cash flows from its telecom business, which had seen heavy investments so far. Reliance Jio Infocomm has now started charging money from consumers for using its mobile telephony services, which it was offering so far for free.
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RIL’s shares have gained almost 30% since the close of trade on February 21, after which the company revealed its telecom tariff strategies and the number of subscribers on its Jio telecom network. Earlier this month, Moody’s Investor Service said that Jio Infocomm’s 72 million paid customers are “credit positive” for the parent Reliance Industries, as subscriber enrolment reduces cash flow uncertainty for the telecom business.
A slew of brokerages have also raised their target on share prices of Reliance Industries citing the company’s investments not only in telecom, but also in its traditional energy and petrochemicals businesses coming to bear fruit.
Global brokerage CLSA recently raised the target price on Reliance Industries’ shares to Rs 1,500 from Rs 1,350. CLSA maintained its ‘buy’ rating on the stock. It cited optimistic commentary by the company management on its telecom venture Reliance Jio, while also raising the valuation multiple on the refining business.
Buyback fails to cheer TCS
On the other hand, TCS shares, after rising to a six-month high of Rs 2,584 in March following the news of a proposed share buyback, have constantly fallen over the last month. It has shed about 4% since February 17, the last trading session before the announcement of the buyback.
TCS had announced a share buyback in February at an attractive 18% premium to its then share price. It had said it would buy back 5.61 crore shares through the tender route at a fixed price of Rs 2,850 per share on a proportionate basis for an aggregate amount of Rs 16,000 crore. However, the buyback would comprise just 2.85% of the company’s paid up capital, implying a very low acceptance ratio.