The stage is set for India’s richest man Mukesh Ambani, chairman and managing director (CMD), Reliance Industries Ltd (RIL) to become world’s second wealthiest person by the end of calendar year 2021. The speed with which RIL shares are rising and looking at its further potential, it is a matter of months before Ambani, who is currently world’s fifth richest person with a fortune of $81 billion, overtakes Mark Zuckerberg of Facebook and Bernard Arnault, chairman of France-based LVMH Moet Hennessy Louis Vuitton, the world's largest maker of luxury goods.
According to Bloomberg Billionaire Index, Zuckerberg’s wealth is $85 billion while Arnault’s holding is valued at $112 billion. Ambani is just $4 billion away from toppling Zuckerberg to grab the fourth position.
So far in the calendar year 2020 (CY20), RIL’s market-cap has surged 49.8 per cent, or Rs 4.77 lakh-crore, from Rs 9.59 lakh-crore on December 31, 2019. In comparison, the S&P BSE Sensex has lost 7.7 per cent so far in CY20 with the combined market-cap of listed companies slipping 5.3 per cent during this period.
On December 31, 2014, RIL accounted for 2.9 per cent of the total BSE listed companies market-cap of Rs 98.36 trillion. Since then, the company’s market-cap jumped nearly five-fold from Rs 2.88 trillion. With the stock more than doubling since its March 2020 lows, RIL has further fortified its position in the S&P BSE Sensex with the counter now accounting for nearly 16.7 per cent of the index’s weight. In CY20 beginning, its weight in the Sensex was 10.8 per cent
Despite its recent run, analysts at BNP Paribas believe RIL still has multiple catalysts in place in terms of a stake sale in its retail venture and a potential sale in oil-to-chemicals (O2C) business segment even at a lower valuation.
“We believe FY22 will see a rebound in refining/chemical margins which will aid earnings as global growth stabilises. We expect refining margins of $9.5/barrel for FY22 and increasing for FY23 as – after a transitionary FY22 – growth should return for both gasoline/jet fuel. Chemical business should be more stable going into FY22 and as global economies revive should once again see improving spreads,” wrote Amit Pramod Shah, an analyst tracking the company at BNP Paribas in a July 24 note, while maintaining the target price at Rs 2,317.
The RIL stock added Rs 8.80 (up by 0.41 per cent) to close at Rs 2,154.95 and was the saviour for the Nifty, which lost 62.35 points (down 0.56 per cent) to close at 11,131.80 on Monday.
Two weeks back, when RIL AGM was held on July 15, Ambani was ranked eighth in the Bloomberg Billionaires Index, a daily ranking of the world's richest people. Within 12 days, his ranking has improved by three notch to fifth position. Following his announcement of making RIL a debt-free company ahead of his earlier commitment of FY’21 by selling close to 33 per cent in Jio Platforms, the upward march of RIl continues. The RIL share was trading at Rs 1,950 level, gaining 10.25 per cent in 8 trading sessions.
According to market observers, the sustained gains in RIL share are expected to continue following the easy money conditions, high amount of liquidity in the market and possible listing of RIL’s Jio platforms in the US markets. This development will help Ambani to easily overtake his nearest rivals Arnault (currently at third position with $112 billion) and Bill Gates of Microsoft (currently at second position with $113 billion) and reach the number two position sometime next year. However, he has a long stretch to reach world’s richest Jeff Bezos of Amazon at $179 billion.
On Monday, at the close of trading hours, RIL stock attained yet another first. It’s market capitalisation touched Rs 14.38 lakh crore and was almost 9.8 per cent of the total market-cap of BSE listed companies of Rs 147.23 Lakh crore. This is the typical characteristic of large conglomerate who dominates the market not only in the trading volume but also the market turnover and more and more investors are forcefully gets attracted towards it.
Recalling such an incident, sources said, in the first decade of 2000, Samsung attained such level in the South Korean stock market, where it commanded 15 per cent of the total market cap of the Seoul stock Exchange.
Analysts said, there is one more reason for RIL’s upsurge to continue as Indian MFs under holds RIL shares. The stock holds a weightage of around 14 per cent in the benchmark indices while Indian MFs cumulative holding in RIL is less than 10 per cent. “Indian MFs will have to jack up their holding by 4 per cent inline with RIL’s weightage”, analysts said. This will also take RIL’s stock further northwards, helping Ambani to inch towards world’s second richest person.
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