Pull Down Scrip Below Rs 2,000; Stock’s Now 37% Off Its All-Time Peak In January
AN ELEMENT of frustration was inescapable among thousands of retail investors watching the Reliance Industries stock getting hammered by the bears. After nine months, the shares of India’s largest private sector company — Reliance Industries (RIL) — once again slipped below the Rs 2,000-mark amid heavy volumes. Though at the close of trading, the stock crawled back over Rs 2,000, it had lost over 37% from its peak in January, with market capitalisation falling below the Rs 300,000 crore-mark. The Mukesh Ambani-controlled RIL is India’s most widely-owned company with around 2.1 million retail shareholders.
In October 2007, Mr Ambani, while addressing shareholders at the company’s AGM, had said, “Between March 2002 and October 2007, the market capitalisation of RIL has grown from Rs 41,989 crore ($8.6 billion) to Rs 3,82,259 crore ($97.3 billion).” Despite the erosion in value since then, some find the scrip attractive at current levels. For instance, Lalit Thakkar, director (research) at Angel Broking, said: “The stock has corrected significantly from its highs. The company would benefit out of the commercialisation of the KG Basin and the RPL Refinery, expected by second half of FY09. This would provide fillip to the overall earnings of the company going forward. Thus the correction provides a good opportunity for the retail investors to buy into the scrip.”
Although RIL’s future growth is not in doubt, not everyone feels that the worst is over for the scrip. A research head at a large domestic research institution said, “RIL is an over-owned stock; owned not just by retail or institutional investors but by speculators as well, which made it fall steeply on weak sentiments. We do not yet know if the stock has bottomed out. On the other hand, despite weak sentiments in the markets, RIL’s fundamentals remain strong.” RIL is more susceptible to fluctuations when the market swings, which is reflected in its beta at 1.12.
At the current market price of Rs 2,022, RIL is now trading at a price-to-earnings multiple (P/E) of 15.1 — a level last witnessed in August 2006. In comparison, the 32% fall in Sensex has been less severe, which has left the Sensex P/E at 17.4 — higher than that of its largest constituent.
AN ELEMENT of frustration was inescapable among thousands of retail investors watching the Reliance Industries stock getting hammered by the bears. After nine months, the shares of India’s largest private sector company — Reliance Industries (RIL) — once again slipped below the Rs 2,000-mark amid heavy volumes. Though at the close of trading, the stock crawled back over Rs 2,000, it had lost over 37% from its peak in January, with market capitalisation falling below the Rs 300,000 crore-mark. The Mukesh Ambani-controlled RIL is India’s most widely-owned company with around 2.1 million retail shareholders.
In October 2007, Mr Ambani, while addressing shareholders at the company’s AGM, had said, “Between March 2002 and October 2007, the market capitalisation of RIL has grown from Rs 41,989 crore ($8.6 billion) to Rs 3,82,259 crore ($97.3 billion).” Despite the erosion in value since then, some find the scrip attractive at current levels. For instance, Lalit Thakkar, director (research) at Angel Broking, said: “The stock has corrected significantly from its highs. The company would benefit out of the commercialisation of the KG Basin and the RPL Refinery, expected by second half of FY09. This would provide fillip to the overall earnings of the company going forward. Thus the correction provides a good opportunity for the retail investors to buy into the scrip.”
Although RIL’s future growth is not in doubt, not everyone feels that the worst is over for the scrip. A research head at a large domestic research institution said, “RIL is an over-owned stock; owned not just by retail or institutional investors but by speculators as well, which made it fall steeply on weak sentiments. We do not yet know if the stock has bottomed out. On the other hand, despite weak sentiments in the markets, RIL’s fundamentals remain strong.” RIL is more susceptible to fluctuations when the market swings, which is reflected in its beta at 1.12.
At the current market price of Rs 2,022, RIL is now trading at a price-to-earnings multiple (P/E) of 15.1 — a level last witnessed in August 2006. In comparison, the 32% fall in Sensex has been less severe, which has left the Sensex P/E at 17.4 — higher than that of its largest constituent.
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