Over a two-fold rise in the share price of Reliance Industries Limited(RIL) since November 09,2016 has made it the first Indian company to touch ₹6 trillion market-cap
As on Thursday Oct 26,2017’s closing price RIL’s market-cap on the BSE stood at ₹5,99,873 crore and it briefly touched ₹6 trillion as the stock hit an intraday high of ₹958 before closing at ₹947.
Traders and investors have lapped-up RIL shares even while the company was yet to achieve a profits from its telecom venture. Market analysts said RIL was getting a premium due to its rapid customer acquisition strategies in domestic telecom market.
RJio’s moves
RIL stock got a further push as Jio, its telecom arm, recently hiked tariffs earlier than anticipated. “RIL’s 15-20 per cent hike in telecom tariffs raises confidence in our bullish (versus consensus) earnings estimates. It reduces drag on energy returns from telecom with sustainable ROE (return on equity) rising to 15 per cent — among the top quartile in our global energy coverage,” said Morgan Stanley in a note to its investors.
Jio increased its tariff by 15 per cent for its popular 84-day plan at ₹459 from 19 October, under which subscribers get 1GB 4G data at high speed a day.
On October 13, Jio reported a profit at earnings before interest and tax (EBIT) level, though at the net level it still made a loss of ₹271 crore. The telecom unit reported revenue of ₹6,147 crore and EBIT of ₹260 crore.
“Investors are optimistic about Jio turning profitable earlier than anticipated and hence they are giving it a premium,” said P Phani Sekhar, Fund Manager, PMS, Karvy Stock Broking.
The stock added nearly ₹3 trillion market-cap since April after its telecom arm Reliance Jio started charging its customers. Jio recently reduced validity on the most popular ₹399 plan to 70 days from 84 days, which analysts feel will result in effective ARPU increase by 15-20 percent. The earlier ₹399 plan with 84 days validity is now available for ₹459 entailing a 15 per cent ARPU increase. Thus effective ARPU will rise by 15-20 percent for Jio subscribers on most popular plans
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