InvestorQ : Reliance became the first Indian company to touch Rs.10,00,000 crore in market cap. What does that mean for Indian markets?
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Reliance became the first Indian company to touch Rs.10,00,000 crore in market cap. What does that mean for Indian markets?

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2 years ago
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For long time there was a debate over who will get to the mark first; TCS or Reliance. RIL on 28 November managed to touch the level of Rs.10 trillion market capitalizations! This is important in a number of ways. Here is why.

· The company started off with a market cap of Rs.10 crore during its IPO in 1977 and has grown to Rs.10,00,000 crore over the last 42 years. That is a compounded annual return (CAGR) of 31.55%. That is the kind of wealth that Indian markets have created through Reliance Industries.

· This is excluding the dividends part. If a 1% dividend yield is also added to the returns then the actual returns would be closer to 32.55% over the last 42 years.

· The market cap of RIL in October 2016 was around Rs.3,25,000 crore. That means nearly 70% of the value of the stock was created just in the last 3 years.

· The big trigger for the Reliance stocks in the last 3 years was the launch of Reliance Jio. It not only drove a major consolidation in the business but it has also helped RIL to emerge the largest telecom player in India and is the only player still robustly adding customers on a monthly basis.

RIL has for long been synonymous with the equity cult in India. This is only underlines the fact. But there is still room to grow. At a market cap of $140 billion, RIL is less than 1/7th the value of global players like Microsoft, Apple and Amazon.


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