Reliance Industries may reach $100 billion market cap

New Delhi, July 31 (UNI) Global financial services firm Morgan Stanley today said Reliance Industries may become the first Indian company to achieve a market capitalisation of 100 billion dollars.

The Morgan Stanley Research note on Asia/Pacific said it has raised the consolidated earnings forecast by eight per cent and three per cent for the financial years 2008 and 2009 respectively.

The firm added that it has also revised the E&P valuation methodology to put a price target of Rs 2,522, implying a 35 per cent upside potential from current levels or the 'base case' scenario.

The report added that in a 'bull case' scenario, the shares can rise by about 37 per cent, which would mean an effective market capitalisation amount of over 100 billion dollars.

The note states that the key triggers for bolstering RIL's performance in this report has been the positive news on E&P business, Reliance Industries signing gas contratcts with various consumers, higher global refining margins and setting up its pan-India retail network.

Reliance Industries market capitalisation is at around 64 billion dollars with Morgan Stanley saying that the value drivers for Reliance Industries will be the increased reserve base and its refinery posting continued strong GRMs and maintaining its spread over Singapore Complex GRMs.

Morgan Stanley, however, cautioned that a cut in import tariffs, rupee appreciation versus the dollar and potential delays in execution of the company's business plan as potential key risks.

The firm noted that RIL has reported a strong first quarter results with a 28 per cent net profit growth, which was eight per cent ahead of expectations.

In the year 2006, India's market capitalisation of the BSE crossed the country's domestic GDP to touch Rs 33 lakh crore, compared to the GDP of Rs 32 lakh crore during FY06.

More than half of the world's market cap now sits outside the United States but the US still commands big market cap companies like Coca-Cola, General Electric, Google, Hewlett Packard, IBM, Intel, JP Morgan, Johnson&Johnson, Merck, Microsoft and Procter&Gamble, all of which are far more then the 100 billion dollar market cap.

UNI