$100-bn mcap addition to RIL likely: Morgan Stanley

New Delhi: Reliance Industries Ltd (RIL) can add up to $100 billion to its market capitalisation(mcap) in its fourth monetisation cycle this century as new cash flow streams emerge and valuation multiples catch up, Morgan Stanley said in a report.On last Friday, the mcap of RIL rose by Rs1,52,264.63 cr to Rs21,18,951.20 cr (Rs21.19 lakh cr or $280bn).

The oil-to-telecom conglomerate has seen monetisation cycles deliver 2-3x value creation for shareholders in the past nearly three decades, with each decade seeing $60 billion+ in market cap creation. RIL is in its fourth monetisation cycle this century.

“Monetisation 4.0 is different; it is supported by the business upcycle, domestic demand, and lower competition,” the brokerage said.

“RIL’s fourth monetisation cycle (since 1997) should add up to $100 billion to $60 billion increase in market cap year-to-date.” Key to this has been RIL’s market share gains, complete integration, and most importantly, ability to execute above investor expectations each time the company has re-imagined its business. This monetisation follows the $60 billion in investments in 2021-23, which was the shortest investment cycle since the 1990s for RIL.

Investments made in new energy, retail expansion to take market share from the unorganised sector, and repurposing existing energy businesses provide a long runway to deliver earnings growth consistently even beyond the next three years should ROCE be sustained above 10 per cent.