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  • Reliance Industries hits $100 billion market cap: Key things you need to know

    Publish date: 13th July, 2018

    On July 12, the Mukesh Ambani-led Reliance Industries Ltd (RIL) became only the second Indian company, after TCS, to cross a market capitalisation (market cap) of $100 billion, its stock spiraling 17.5% since the beginning of the year to beat the benchmark Sensex that rose 7.3%. With this, it also regained its 2007 peak.

    The RIL stock closed at Rs 1,082.20 on 12th July, up 4.4%, taking the company’s valuation to $100.03 billion (Rs 6.85 trillion) at day’s close. It rose another 1.7% on Friday to end at Rs 1,101, a little short of its day’s high (and 52-week high) of Rs 1,109.

    Related: Back to basics:- Understand market capitalisation in detail

    Reasons for Market Cap Rise

    Stock prices reflect investor sentiment. If investors expect a rise in profits in future, they will be more willing to buy the stock. The increased buying activity often leads to a rise in stock prices.

    In Reliance’s case, the reasons for the rise in stock prices can be traced to the July 5 Annual General Meeting (AGM). In the 41st AGM, Mukesh Ambani set a target of doubling revenues in seven years, and announced new business plans to achieve this. All this will be an addition to RIL’s flagship refinery and chemicals businesses.

    Related: 5 interesting takeaways from Reliance AGM

    RIL’s new plans seem to be the primary thrust behind the rise of its market capitalisation. These are broadly:

    • Fibre-based broadband services across 1,100 cities.
    • Integration of retail and digital platforms – to make deeper inroads in the e-commerce industry through a hybrid online-to-offline commerce platform.
    • Launch of Jio phone 2 – touted as the high-end variety of the Jio Phone.
    • Diversification of hydrocarbon business – by adding new chemical chains to produce newer materials and composites of higher value.
    • Consumer-centric businesses focus – that is aimed at ensuring that this vertical contributes as much as the petrochemical business.
    • Investor sentiments seemed galvanized by visions of scaled-up consumer profits because of the strategic move to a technology company that would have three key verticals:

    • Mobile connectivity,
    • Fiber connectivity, and
    • E-commerce platform.