With a sharp rally in the Reliance stock, the net worth of Mukesh Ambani, the chairman of Reliance Industries, jumped $6.7 billion on Monday to $111.1 billion, according to the Forbes Real-Time Billionaire list. This propelled him to the 11th position among the world’s wealthiest individuals, above Mexico’s richest person Carlos Slim.
On Monday, Reliance Industries surpassed Petrochina Co and Shell Plc in market capitalisation, becoming the fourth most valuable energy company globally. Reliance is now behind only Saudi Aramco, Exxon Mobil, and Chevron Corp on the global market-cap leaderboard.
As the stock logged its most substantial single-day gains in 40 months, the oil-to-telecom conglomerate boosted its market capitalisation by ₹1.26 lakh crore, reaching ₹19.59 lakh crore in market value.
Analysts expect the rally to continue in the near term.
The stock, which opened at ₹2,713, hit a high of ₹2,905 before closing at ₹2,896. Since October 2021, it has consolidated within ₹2,000-2,650 levels. However, with the current month’s gain of 12%, the stock has decisively breached the consolidation zone.
Technical analysts said the stock is currently exhibiting a strong uptrend. “The daily, weekly and monthly ‘bollinger band’ buy signal suggests increased momentum across all the time frames,” said Rajesh Palvia, head of derivatives and technicals, Axis Securities. “The crucial support is around ₹2,720-2,640 levels whereas, on the upside, the stock may advance toward the ₹3,000-3,500 levels,” Palvia said. In July last year, Reliance demerged its financial business into Jio Financial and listed it separately. Jio Financial is currently valued at ₹1.59 lakh crore.
Analysts maintain an optimistic outlook on Reliance Industries, underscoring the company’s positive growth prospects, particularly in light of its robust free cash flow generation.
“RIL has operated at material-negative free cash flow for the past three years, driven by spending in telecom,” said Sanjay Mookim, head of research, JP Morgan India, in a note. “As that fades, with an EBITDA run-rate of $20 billion a year, RIL is expected to deliver positive free cash flow for the next three years despite elevated capex plans at new energy complexes, in the retail business, and toward petchem capacity expansions.”
Last week, Reliance reported December 2023 quarter results with a 23% year-on-year growth in the topline/bottomline.
“With pan India 5G rollout, Reliance is well positioned to monetise the services while capex intensity has come down substantially, which shall benefit cash flows,” said Rohit Nagraj, analyst, Centrum Broking. “We believe the growth momentum will continue in digital and retail supported by oil & gas.”