RIL BECOMES FIRST INDIAN COMPANY TO HIT RS 21 LAKH CRORE MCAP
Shares of oil-to-telecom-to-retail conglomerate Reliance Industries (RIL) jumped over 2 per cent to hit its fresh all-time high of Rs 3,129 in morning trade on Friday, June 28, on BSE. With this, the market capitalisation (mcap) of Reliance stock jumped to over Rs 21 lakh crore mark for the first time.
The stock rose after Reliance Jio Infocomm Ltd announced new unlimited plans effective July 3. The new tariffs range from Rs 189 for 2 GB/month to Rs 3,599 for a 2.5 GB/day annual plan, with unlimited 5G data for plans of 2 GB/day and above.
The tariff hikes were largely in line with the market’s expectations. However, Jio taking the lead in raising tariffs and shifting focus to improving returns on investments, is a sentimental positive, according to the brokerages.
On June 28, Jefferies raised Reliance’s price target to Rs3,580 from Rs 3,380, indicating a 17 percent upside from Thursday’s close, the highest target on the street. The brokerage maintained a ‘Buy’ rating, estimating Jio’s revenue and profit to grow at an annual pace of 18 percent and 26 percent, respectively, from FY24 to FY27.
Morgan Stanley also maintained an ‘Overweight’ rating with a Rs 3,046 stock price target, noting the tariff hikes are in line with expectations, and it expects new energy cashflow streams by year-end. The investment bank expects no further tariff hikes until FY27 but said a 20 percent tariff increase next year could boost earnings by 10-15 per cent.
The tariff hike is largely in line with Kotak Equities’ expectations (20 per cent from June 2024) and is already built into their estimates. Further, R-Jio has also restricted unlimited 5G data usage to 2GB/day and above plans (versus Rs239 and above plans earlier), which could potentially lead to up-trading by higher data consumers. The domestic brokerage firm expected Bharti Airtel and Vi to also raise tariffs soon, among which, the former has already announced tariff hikes of 10-21 per cent.
Among 35 analysts covering Reliance, 28 recommend a ‘Buy,’ five say ‘Hold,’ and two advise ‘Sell.’