Reliance Industries Will be First Ever India Company to reach $100-billion Market Cap

By Vipin Agnihotri

Billionaires all around the world watch out for Mukesh Dhirubhai Ambani. He is all set to get the bragging rights as one of the worlds top three or four richest men. It is worth mentioning in this regard that Forbes has put him at a distant 14, with a net worth of $20.1 billion.

I am not saying this because he is an Indian. I have a valid point to say that. According to Wall Street, Reliance Industries could touch $100 billion (Rs 4,10,000 crore) in market cap sometime soon. If that happens, Reliance will be the first company in India to achieve that feat.

At this moment of time, Reliance Industries market cap is around $63 billion, and Ambani owns more than half of the company. Morgan Stanley analysts are of the opinion that Reliance Industries value will jump by 58 per cent?

I totally agree with their estimation because from next year onwards, Reliance Industries will start pumping oil from its proven reserves of 1.4 billion barrels. When one take into consideration the fact that Reliance Industries total proven and possible reserves presently of 5.4 billion barrels, the companys exploration and production (E&P) business will generate $3.5 billion (Rs 14,350 crore) in profits between 2010 and 2015.

But the question now arises: How Reliance Industries will unlock its share value to touch $100 billion? When The India Street contacted Reliance Industries spokesperson in this regard he said that that the company would have to opt for both organic and inorganic growth to achieve the target.

Apart from that, Reliance Industries would need to substantially increase its share of revenues from E&P presently just 2 per cent of its $22-billion turnover. Point to be noted here is that at present, 60 to 70 per cent of Reliance industries turnover of Rs 1,10,000 crore comes from the refining business.

However, some of the experts believe that one-third of the Reliance Industries value is coming from gas and if the government, which has a profit sharing agreement, fixes a lower price, Reliance Industries could suffer.

All in all, if the Sensex rises 30 per cent in the next one year, you could see Reliance Industries hitting the $100-billion mark sooner than expected. In short, Reliance Industries joining the $100-billion market cap club is not a matter of if, but when.

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• Wikipedia Entry on Mukesh Ambani