Reliance Industries Ltd, India's most valued firm, may become the first in the country to achieve a market capitalisation of $100 billion, international brokerage and equity research major Morgan Stanley said on Tuesday.
Morgan Stanley's India-based analysts said in a research note sent to the firm's institutional clients that they were raising the consolidated earnings forecasts for RIL in the current and next fiscals.
They also revised upward their one-year price target for RIL shares, while projecting a 35 per cent surge from the current levels in its 'base case' scenario.
Morgan Stanley further said in 'bull case' scenario, the shares could rise by about 37 per cent, which when translated into market capitalisation would amount to over $100 billion.
RIL's market cap currently stands at about $64 billion, the highest for any listed entity in the country.
However, this pales in comparison to the US, where the most valued listed entity ExxonMobil, which is also into the energy business, has a market value of close to $485 billion.
None of the Indian companies have ever achieved this mark, even though at least 30 companies in the US have a market capitalisation of more than $100 billion.
These include tobacco giant Altria Group, insurance major AIG, telecom firm AT&T, Coca-Cola, General Electric, Google, Hewlett Packard, IBM, Intel, JP Morgan, Johnson and Johnson, Merck, Microsoft, Procter and Gamble, Verizon Communications and Wal-Mart.
The combined market cap of all the 30 constituents of the Dow Jones Industrial Average, the benchmark index of the US market, is more than four trillion dollars, which is over four times the entire market capitalisation of all the listed entities here in India.
In comparison, the cumulative market cap of the 30 companies present on Sensex, the Indian market's benchmark index, is less than $500 billion.
Morgan Stanley said the key value drivers for RIL going ahead were the increased reserve base for the company's exploration and production business, robust performance in refinery business, signing gas contracts with various consumers, higher global refining margins and the setting up of pan-India retail network.
However, it also noted reduction in import tariffs and the rupee appreciation versus the US dollar and potential delays in the execution of the company's business plan as some potential key risks.
Morgan Stanley noted that RIL has reported strong first quarter results with a 28 per cent net profit growth, which was 8 per cent ahead of expectations.