This index heavyweight made investors lakhpati in 20 years; have you missed the bus?

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When it comes to investing in equities, market watchers advise retail investors to look for quality players and stay invested for the long run. One such stock is energy-to-telecom behemoth Reliance Industries (RIL), which has changed the fortunes of investors during the past 20 years.

The adjusted share price of the company has rallied 2,731% to Rs 1,959.25 on May 3, 2021 from Rs 69.20 on the same day in 2001. The movement in share price indicates that an investment of Rs 25,000 in Reliance Industries in 2001 would have now become over Rs 7 lakh at present. Equity analysts see further upside in the stock post Q4 results.

Journey so far

The market capitalisation of the company has soared to Rs 13.25 lakh crore on May 3 from Rs 36,112 crore in 2001. Over the past 20 years, the company has diversified its business from oil and gas to retail and telecom.

In 2000, the company commissioned the world’s largest refinery in Jamnagar in a record 36 months. Later, the company emerges as the first and only private Indian organisation to be listed in the Fortune Global 500 list in 2004. After five years, RIL commenced the production of hydrocarbons in its KG D6 block.

Thereafter, Reliance Retail becomes the largest retailer by revenue in 2014. In 2016, Mukesh Ambani announced the launch of Reliance Jio, which upended the mobile data tariffs in the country. At present, RIL has been busy acquiring stakes in technology firms such as artificial intelligence (AI), blockchain, cloud, augmented reality (AR), gaming and banking software among others.

Profit after tax of the company has grown to Rs 53,223 in FY21 from Rs 2,646 in FY2001, indicating an annualised growth of 16% during the past 20 years. Likewise, gross sales of the company have also increased 16% annually to Rs 5.39 lakh crore during the same period.

Recent performance and brokerage take

The stock has also managed to rally nearly 110% since March 2020 lows despite uncertainty over Covid pandemic. On the other hand, the benchmark BSE Sensex has gained 83% to 48,718 during the same period. Of late, the company on April 30 posted 108% year-on-year (YoY) growth in consolidated net profit at Rs 13,227 crore for the quarter ended March 31.

Brokerage Sharekhan is positive on RIL with a price target of Rs 2,400. “RIL’s efforts to carve out its O2C segment into a separate subsidiary would facilitate strategic partnership with global players and help unlock value. Further, value unlocking in digital, and retail would add value to shareholders’ returns in the coming years,” the brokerage said.

On the other hand, Motilal Oswal Financial Services also has ‘Buy’ RIL with a price target of Rs 2,195. JM Financial has kept a target price of Rs 2,500 for RIL.

“We expect a strong free cash flow generation phase with major capex completed and strong 17-18% EPS CAGR likely over the next 3-5 years,” JM Financial said.