Mumbai: Reliance Industries Ltd on Monday became the second Indian company to cross Rs5 trillion market capitalisation after the nation’s biggest software major, Tata Consultancy Services Ltd (TCS).

The stock has become a favourite with investors since 1 April, gaining nearly 17.60% and outstripping the benchmark Sensex index, as investors believe that most of the investments made by the company will start bearing fruit from hereon. So far this year, it gained 43.5% compared to 20.6% by the Sensex.

On 1 April, the company ended its free internet service and started charging its Reliance Jio clients. Also, most of its core projects like refinery off gas cracker (ROGC) and petcoke gasfier projects are on track for completion.

TCS is the first company to have achieved this milestone and the last time it was seen above Rs5 trillion was on 7 June. However, currently it is trading below this level, as the stock has corrected due to headwinds faced by the entire Indian information technology sector, thanks to protectionist measures by the US, where the Donald Trump administration has made it tough for outsourcing companies to get H1B visas. TCS closed at Rs2,395.70 on the BSE, down 0.13% from previous close, while its market cap was at Rs4.58 trillion.

RIL scrip surged for the eleventh consecutive session and climbed 12.4% in this period. The stock closed at Rs1,551.35 on BSE, up 1.33% from its previous close while RIL’s market cap stood at Rs5.04 trillion.

Analysts said the gains in the stock were perhaps led by expectation of a positive announcement, particularly on the Jio front, in its annual general meeting which is due on 21 July.

According to Brokerage firm CLSA, Reliance Jio may introduce a low-cost feature phone which is likely to cost Rs1,000-1,500. However, RIL has not commented on this yet.

“We believe 4G feature phones could catalyze the migration of a large voice/2G sub base to the 4G ecosystem. However, if RJio were to target them with attractive prices/bundles, it could pose the next big risk for incumbents, which may need to respond with attractive offers or risk churn, in our view," said Morgan Stanley, in a 9 July report.

The company will announce its June quarter earnings on 20 July and according to four Bloomberg analysts, it may report net profit of Rs7,710.40 crore, while net revenues will be at Rs75,360.40 crore.

“We expect stable to Positive June Quarter with improving cash flow, return on equity to rise and profits to improve. The GRMs should remains stable to better at $11.5 per barrels. Even the Reliance Jio plans & the pricing of the Handset will work to their advantage," said Kamlesh Shroff, founder, The Omniscient Securities Pvt. Ltd, a brokerage house, a member of BSE and NSE.

Of the analysts covering the RIL stock, 24 have a “buy" rating, 12 have a “hold" rating, while three have a “sell" rating, shows Bloomberg data.

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