Reliance Industries overtakes Indian Oil to become largest company by revenue

The Mukesh Ambani-led Reliance Industries (RIL), which was about half the size of Indian Oil Corporation (IOC) till nearly 11 years ago, has displaced the public sector refiner as the biggest company by revenue.

While the net revenue of RIL surged by 44.8% in FY19 to `5.67 lakh crore, the revenues of IOC rose by 28.03% during the year to `5.28 lakh crore — `38,986 crore less than that of RIL, Bloomberg data show.

With this milestone, RIL has achieved the numero uno position in terms of all three parameters — revenue, profit and market capitalisation.

With strong refining margins and an increased focus on the retail business, RIL witnessed a 14.1% CAGR for its full-year revenues between FY10 and FY19. In contrast, revenues of IOC grew at a much slower pace of 6.3% during the same period.

As on Monday, RIL boasts of a market capitalisation of `8.4 lakh crore — nearly a 10th of the Nifty’s market value of `86.4 lakh crore. The company also enjoys a similar share in the combined revenues and profits of the whole index constituents.

After hitting a peak in the beginning of May, the RIL stock lost its charisma and plunged over 12.5% in 10 days. Nevertheless, it has rebounded since then with a gain of over 7.6%.

The fuel retailing margin of IOC jumped in Q4 as the company did not fully pass through low crude costs to consumers. However, the weak refining margin environment on poor light and middle distillate spreads should keep refinery earnings under pressure.

Analysts at Nomura observed that refining margins, though improved from Q4 levels, continue to remain weak. “The outlook is weak, with more refining capacity coming on line, while the demand outlook is less optimistic. We remain bearish on refining,” the brokerage said in a note to investors.

Reliance Industries delivered a record consolidated net profit of `39,588 crore for fiscal 2018-19 in a period of heightened volatility in the energy markets.

“Focus on service and customer satisfaction led to higher numbers of subscribers and footfalls across our consumer businesses, driving robust revenue growth,” said Mukesh Ambani, chairman and managing Director, Reliance Industries after the Q4 results.

Interestingly, RIL which boasts of the highest cash reserves of `1.33 lakh crore on the book, also has the highest gross debt of `2.88 lakh crore at the end of March 2019.

As of Monday, 61.1% of the 36 analysts that track RIL had a ‘buy’ recommendation on the stock, with those of Nomura having a one-year price target of `1,620 per share compared with the closing price of `1,325.90.