RIL will hit $200-b m-cap in 2 years, says BofA-ML

Our Bureau Chennai | Updated on October 16, 2019 Published on October 16, 2019

Reliance Industries’ ratings are supported by its strong business profile and robust refining asset quality, Fitch said.   -  Bloomberg

‘New commerce venture, fixed broadband biz, digital initiatives could add $55-b in value’

Reliance Industries would be the first Indian company to reach $200-billion market cap in 24 months, Bank of America Merrill Lynch said on Wednesday. Currently, RIL commands a market cap of $122 billion.

The foreign fund and advisory firm has reiterated its buy rating on RIL with a price target of ₹1,615. Bull-bear analysis shows risk-reward skewed with 36 per cent CAGR upside from the current market price in bull-case scenario and a 17-per cent downside in bear-case in 24 months, the research firm said.

In a report, BofA-ML said, its analysis indicates that incrementally three transformational drivers — new commerce venture, fixed broadband business and digital initiatives — could add $55-billion enterprise value for the company.

RIL’s new commerce initiative is looking to empower kiranas in unorganised retail market, it said and added the comany’s entry in SME enterprise space where its tie-up with Microsoft and attractive pricing ($22/month) could entice uptake. Besides, Jio’s fibre broadband business where it could leverage Den/Hathway’s networks to drive India’s current low-fibre broadband penetration of 6 per cent, it further said.

Also, digital initiatives like advertising, lending along with SME/broadband could add $22-billion incremental value, BofA research said.

“We think the market is giving little credit to these initiatives given limited visibility. We expect near-term momentum to be strong, led by IMO 2020 implementation and continued share gains in telco and retail business. Additional $17 billion could be added in bull-case scenario led by better-than-expected cellular tariff hikes/better GRM due to IMO.”

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Published on October 16, 2019
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