Reliance Industries, owned by Mukesh Ambani, saw its finest day on Monday as the stock broke out of a trading range that had been in place for more than two years. The expectation that the interruption created by the ongoing Red Sea issue will enhance margins on some oil products in Asia drove the shares to rise 7%, the biggest since September 2020. According to the Forbes Real-Time Billionaire list, the surge increased Ambani's net worth to $111.1 billion, placing him in 11th place and barely ahead of Mexico's richest person, Carlos Slim.
The rally was further aided by reports that Disney's India division may now be valued at less than half the amount the US giant had previously sought in a proposed merger with Reliance's media division. Reliance became the fourth most valuable energy firm in the world by surpassing Petrochina Co and Shell Plc in terms of market capitalization. On the global market-cap leaderboard, it is currently only behind Chevron Corp, Saudi Aramco, and Exxon Mobil.
The Red Sea tensions have led to "certain optimism about refining margins picking up further for the energy business," according to a Bloomberg story quoting Hemang Khanna, vice president of Nomura Financial Advisory and Securities India. According to him, the crisis's effects on product margins will "flow immediately into Reliance's earnings" for the March quarter.
Since the Houthi attacks on cargo ships in the Red Sea haven't significantly disrupted Russian oil supply to India, Reliance, one of the largest purchasers of Russian crude, is benefiting from the expanding diesel margins. According to third-party statistics collated by Bloomberg, refinery margins for producing gas oil over Dubai crude in Asia have increased to $25.53 per barrel from $20 per barrel a month ago.
Reliance was trading at ₹2,713, reached a high of ₹2,905, and ended the day at ₹2,896. It has consolidated between ₹2,000 and 2,650 levels since October 2021. With the 12% gain so far this month, the stock has broken out of the consolidation area.
