Ambani: Rich returns

Mumbai, April 22: Reliance Industries Ltd (RIL) is likely to see its market valuation double to $100 billion in a year. It had a turnover of around $20 billion last year.

The vault in valuation is being attributed to significant developments that are expected to unfold in the next calendar year. Its organised retail business, which is being ramped up, could start showing results by then; the oil and gas business is also expected to gain traction and should reflect in its valuation. RIL had made one of the world’s largest gas discoveries in the Krishna-Godavari (KG) basin. Gas output from the field is scheduled to begin from the middle of next year.

Apart from the merger of Indian Petrochemicals Corporation Ltd (IPCL) with the company, the refinery of Reliance Petroleum Ltd (RPL) is also expected to contribute to RIL’s higher valuation. RIL holds more than 70 per cent in RPL.

“In all probability, RIL is likely to be valued at close to $100 billion by the middle of next year. This will be primarily on account of two factors — the oil and gas revenues from the KG basin and organised retail business. This fiscal will be the first full year of RIL’s retail operations, but the real impact will be felt from next fiscal onwards,” said an analyst.

Mukesh Ambani has four listed companies within his fold: RIL, RPL, IPCL and Reliance Industrial Infrastructure. Sources said the combined market capitalisation of these companies is around Rs 240,000 crore.

RIL’s market cap increased to Rs 214,774.43 crore — equivalent to over $50 billion — after the company’s shares touched a 52-week high of Rs 1,545 last week.

“Some of the brokerages have already upped their price target of RIL for the short run. When the full impact of the retail business and oil and gas assets from the KG basin is reflected in over a year, the stock price could even touch Rs 3,000. At these prices, the valuation could touch $100 billion,” sources added.

The Reliance stock closed at Rs 1,541.25 last Friday, up 3.24 per cent from its previous close. Analysts feel the lofty numbers will help Reliance raise funds at attractive rates when it seeks to fund its capital expenditure plans.

Although RIL has the largest market capitalisation in the country, it pales in comparison with some of the global oil majors. Exxon Mobil’s market cap is put at over $440 billion.

According to reports, the company is revaluing its oil and gas assets. However, sources close to RIL denied any such move.