RIL is the Most Profitable Company in the Nifty 50 List

Mukesh Ambani led Reliance Industries Limited’s (RIL) digital arm, Reliance Jio is creating waves in the market with its new 4G venture. Within a short span of time, Jio managed to attract a large user base through its preview offer, which included free HD voice calls, video calls, and high-speed Internet services for a period of three months.

RIL’s position in Nifty 50

Therefore, it does not come as a surprise that Reliance Industries Limited has now gained a premium position in the business world. The company’s ranking as the most profitable in the Nifty 50 is testimony to this. RIL managed to make it to the top because of its contribution to the Nifty 50 aggregate net profit, which has been calculated as the largest.

Highest net profit

Reliance Industries surpassed competitors like TCS to emerge as the company with the highest net profit in the April to June 2016 quarter. While TCS reported a profit of Rs. 6318 crore, Reliance scored 12.6% higher than the company, thereby leading TCS to gain second position in the Nifty 50. Reliance Industries reported a total net profit of Rs. 7113 crore and therefore emerged first in the list.

SEBI’s extension

SEBI decided to extend the results season by a month for Nifty in the April to June 2016 quarter. Additionally, this decision gave India Inc. time to implement the Ind AS accounting standards, which was recently introduced. Rs. 69,793 crore has been the estimated Nifty 50 aggregate net profit for the quarter.

RIL leads in the energy sector

Moreover, RIL also proved tough competition for players like ONGC with the oil company reporting a net profit of Rs. 4232.5 crore. However, RIL’s energy sector counterpart, ONGC scored 68.1% lower than Reliance Industries. This has managed to give RIL yet another impetus, considering that ONGC has been a constant performer in the energy sector.  Reliance managed to surpass the previous year’s aggregate net profit which was 8.1% and acquire 10.2% this year. Furthermore, RIL managed to contribute this aggregate net profit all by itself. Additionally, the private conglomerate is expected to maintain consistency with regard to this contribution owing to the multiple large-scale projects that are expected to be launched in the upcoming years by RIL.

Nifty index

As on 14th September, 2016, the market closed at 8762.6, with the price-to-earnings ratio of Nifty estimated at 23.9 and its EPS at 364.8. It should be noted that Nifty’s aggregate net profit is affected with every additional rupee. Moreover, this also leads to an improvement in the index’s EPS. Therefore, it is imperative that the Nifty 50 companies’ earnings growth increase to maintain the sustainability of the present level of Nifty’s index.

Over the last one year, Mukesh Ambani led Reliance Industries’ scrip has increased by more than 21%. Additionally, Reliance was also able to make an improvement in its position in Nifty by garnering 5.4% (September 2016) as compared to 5% in the previous year’s corresponding period (September 2015).

Summary

Reliance Industries Limited makes the largest contribution to the aggregate net profit of Nifty, thereby making it rank first in Nifty 50.

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