Morgan Stanley has re-rated the stock of Reliance Industries Ltd from ‘equal weight’ to ‘over-weight’ after its promoter Mukesh Ambani announced major decisions at the Annual General Meeting (AGM) held last week.

“In our view, as supply-side re-balancing helps refining markets improve, significant fall in costs of feedstock like ethane reduces challenges for RIL’s petrochemical division and downside risks ease in the aromatic value chain. RIL’s AGM announcement also provided a path to de-lever the balance sheet (debt/liabilities account for a third of RIL’s enterprise value). This should address investor concern about the balance sheet,” the Morgan Stanley research report said.

PTI adds

RIL’s faster asset monetisation, together with the rebalancing of oil refining market and cheaper feedstock, could help drive up the company’s price-to-earnings (PE) ratio, Morgan Stanley said in the report. Including RIL in its ‘Three in Three’ report for Asia-Pacific, the brokerage firm upgraded the company’s stock to ‘overweight’.

“RIL has corrected 12 per cent in three months as both refining and chemical industry margins hit cash cost (or operational cost),” Morgan Stanley said in the research report.

Most valuable firm, again

At close of trade on Monday, RIL’s market capitalisation (m-cap) stood at ₹8,19,073.62 crore, which is ₹7,226.43 crore more than that of Tata Consultancy Services’ ₹8,11,847.19 crore on the BSE. Shares of RIL rose by 1.15 per cent to close at ₹1,292.10 on the BSE, while those of TCS closed flat at ₹2,163.55.

Since August 9, RIL shares have gone up by over 11 per cent.

RIL and TCS have in the past also competed with each other for the No 1 position in terms of market capitalisation.

In the domestic m-cap ranking, RIL was at No 1 position followed by TCS, HDFC Bank (₹6,03,371.38 crore), HUL (₹3,94,145.32 crore) and HDFC (₹3,64,763.82 crore) in the top-five list.

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