Why Has Reliance Industries Gained 130% Since March?

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Why Has Reliance Industries Gained 130% Since March?
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- Reliance Industries (NS: RELI ) is India’s largest company in terms of market cap and the stock has soared a phenomenal 130% since March 2020. RIL stock began the year at Rs. 1,500 and soon fell to a 52-week low of Rs 867.4 as the Nifty and BSE Sensex plunged close to 40% due to the COVID-19 pandemic as well as lower oil prices.

However, since then the stock has made a strong comeback and touched a record of Rs 2,369.35 in September. So what’s driven this massive surge in Reliance Industries?

Billion-dollar investments by a slew of foreign investors

Several global heavyweights have pumped in billions of dollars to get a slice of the Jio dream. Launched back in 2016, Jio is now the leading telecom operator in India and has attracted investments from Facebook (NASDAQ: FB ), Intel (NASDAQ: INTC ), Qualcomm (NASDAQ: QCOM ), and Alphabet’s Google (NASDAQ: GOOGL ). Private equity firms such as KKR and Silver Lake have also invested in Jio.

In the last six months, Reliance Industries has raised approximately Rs 170,000 crore or $23 billion in strategic investments.

However, Reliance remains an energy-focused company and generates the majority of its sales from the refining and marketing of oil. This is followed by its petrochemicals business, organized retail, telecom, and media businesses.

Is Reliance debt-free?

Mukesh Ambani previously aimed to make Reliance Industries net-debt free by the end of this fiscal year. While this idea would have seemed absurd at the start of 2020, the above investments have managed the company to attain its financial goal well before March 2021.

While Reliance still has debt on its books, the company has enough liquidity to cover its liabilities and continue to invest in growth and capital expenditure.

Reliance will be a key player in the transition towards 5G technology and the rebound in oil prices in the upcoming months coupled with its strong balance sheet should be key drivers of its stock price.

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