Last week, Reliance Industries (RIL) achieved the coveted milestone of crossing $ 200 billion in market capitalization. There are less than 50 companies around the world that are valued at more than $ 200 billion.
Morgan Stanley analyzed how the Mukesh Ambani-led firm compared to eight global firms when they crossed the $ 200 billion milestone.
For example, when video streaming company Netflix surpassed $ 200 billion in market capitalization in June, it had one-year future revenue of $ 29 billion, versus $ 83 billion for RIL ($ 41 billion excluding the energy business). Its price-earnings multiple (P / E) was 52x compared to 28x for RIL (ex-energy). All other tech earnings Amazon, Tencent, and Facebook also traded at much higher valuations compared to RIL when they crossed the $ 200 billion valuation mark.
“RIL’s $ 200 billion market capitalization does not reflect very aggressive future multiples compared to technology or even energy pairs when they reached this milestone,” observed analysts at Morgan Stanley Mayank Maheshwari, Ridham Desai and Simeon Gutman in a note.
The jury is still out on whether RIL should be valued like FAANG’s stock. In particular, RIL’s one-year revenue for digital and retail businesses is much lower than Amazon, Apple, or Walmart had.
Additionally, Ebitda for the ex-energy business is currently similar to Netflix’s, but much lower than many other tech and retail giants, the brokerage noted.
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