AGM to AGM: How 11 montns altered the looks of RIL

AGM to AGM: How 11 montns altered the looks of RIL

Oil-to-telecom giant Reliance Industries added Rs 5,60,000 lakh crore to its market capitalisation in the 11 months since the last annual general meeting, where Chairman Mukesh Ambani had unveiled an audacious plan to make the conglomerate net debt free and propel his consumer businesses into a new growth trajectory by bringing in global investors.

RIL is now the most-valued company in India with nearly Rs 13 lakh crore m-cap, up from Rs 7.37 lakh crore on the day of last AGM on August 12, 2019. The spike in the company’s market value has helped Ambani move past the likes of Elon Musk of Tesla and Google Founders Sergey Brin and Larry Page on the world’s top billionaires’ list. At last count, Ambani was the sixth richest person in the world.

In a July 7 note, BofA Securities said among the key initiatives announced at the last AGM, RIL has completed strategic stake sales in Jio, petro-retail and cut net debt to zero. “We might get an update on the remaining two goal: stake sale to Aramco and that in Reliance Retail,” BofA analysts said in a note.

The company also emerged the top wealth creator in the Sensex pack. It was followed by Bharti Airtel (up up 59 per cent), Nestle India (up 41 per cent), HUL (up 21 per cent) and Sun Pharma (up 16 per cent).

During the period, investors handsomely rewarded Ambani’s effort to reduce net debt to nil before schedule. RIL now trades at 41 times trailing price-to-earnings multiples, more than double of the five-year average of 18.12.

“RIL will continue to outperform. The market is discounting the next three years of growth, which belongs to digital, retail, entertainment and the money they have made. Therefore, valuation is not a parameter. In the next five years, market cap of Jio business will be alone 10 lakh crore,” says Sanjiv Bhasin, Director, IIFL Securities.,

“For the valuation multiple. The sum-of-the-parts valuation is still very attractive for 2-3 years. Now, all eyes are on the upcoming AGM,” says Sanjeev Hota, Head of Research, Sharekhan.

Shares of the company scaled their fresh all-time high of Rs 1,978.50 ahead of the 43rd AGM on Wednesday. Analysts believe after a series of big-bang deals announced over the past few months, the AGM may just focus on the path ahead.

The company management is widely expected to give more updates on the status of some of the announcements made at the last AGM, and also provide an update on media reports about ongoing talks for a stake buy in Future Group.

“We believe the company will give more clarity to new businesses of RIL and the space it may expand into. The timeline on Aramco deal, the future game plan for Jio and digital services are among other key monitorables,” Hota said.

Source: ET Markets

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