Market valuation: RIL loses Rs 1.2 lakh crore as shares slump

The market capitalisation of Reliance Industries (RIL) lost a whopping Rs 1.2 lakh crore on Monday, which is more than its revenue for the three months ended September 2020. In terms of scale, this is huge as there are only 23 companies with a minimum market cap of Rs 1 lakh crore on the Nifty50, the remaining 27 companies have a valuation of less than Rs 1 lakh crore.

The net profit of the oil-to-telecom behemoth declined 15% during the quarter to Rs 9,567 crore on the back of a 25.7% fall in net revenue. The net revenue for the quarter stood at Rs 1.11 lakh crore.

Shares of RIL tumbled as much as 8.6% on Monday to mark its biggest single-day fall since March 23. The stock ended the day at Rs 1,877.45 on the NSE. As of Monday’s close, the market valuation of the country’s largest company stood at Rs 12.35 lakh crore, which is 13.4% of the entire Nifty50 market capitalsiation. According to Bloomberg, the slide in RIL shares also eroded promoter Mukesh Ambani’s net worth by almost $7 billion to about $71 billion.

Analysts at Nomura say that the very weak refining margin was largely offset by petrochemical and consumer businesses. “After a weak Q1, we expected a recovery in petrochemical and retail, while refining was expected to be weak. Reported Q2 refining earnings were much weaker than our estimate. However, petrochemical, Jio and retail earnings were better than our expectations,” the brokerage wrote in an investor note.

The company on Friday reported a better-than expected earnings for the Q2FY21 cushioned by a very low effective tax rate and other income. Bloomberg consensus had pegged a net profit estimate of Rs 8,388 crore for the quarter. The effective tax rate for the quarter stood at -0.12%. The Reliance stock had rallied 37% between January and Friday against the Nifty50 fall of 4.3% during the same period.