InvestorQ : What is so special about Reliance Industries crossing the Rs.10 lakh crore market cap mark as it was covered in most media?
Dilmini Mercia made post

What is so special about Reliance Industries crossing the Rs.10 lakh crore market cap mark as it was covered in most media?

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Khushi Patel answered.
3 years ago
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Last week, Reliance Industries became the first even Indian company to scale market cap of Rs.1,00,000 crore and that was always expected. In fact, TCS is close behind and HDFC Bank is also not too far away. But the level of Rs.10 trillion has a much larger significance from the point of view of Indian capital markets as well as from the point of view of the capacity of RIL to constantly adapt to changes.

To get a better idea, look at RIL since its IPO in 1977. When RIL came out with its IPO in the year 1977, it had a market cap of a mere Rs.10 crore. Over the last 42 years the market cap of RIL has grown by nearly 1 lakh times. In other words, an investment of Rs.1000 in RIL in 1977 in its IPO would be worth Rs.10 crore today. To put the returns in perspective, this will translate into compounded annual returns (CAGR) of 31.5% per year over the last 42 years. This is only the capital appreciation part of the story. If you add the average dividend yield of 1.4% that RIL has averaged over the years, then your average CAGR on the stock would be 33%. That explains why the stock has been one of the finest wealth creators in the last 4 decades. This comes at a time when the Sensex has actually grown by 410 times over the same period giving CAGR returns of around 17% annualized. Clearly, RIL has outperformed the index by a huge margin. Interestingly, 70% of this wealth was created in last 3 years.

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