Biggest-Ever M-Cap Erosion! Reliance Industries Loses Rs 6 Lakh Crore Over Last 8 Months

Shares of India’s largest company by market capitalisation (m-cap) Reliance Industries Ltd. (RIL) fell as much as 3.67 per cent on Monday, March 3 to hit a 52-week low of Rs 1,156 per share.

RIL, however, recovered from its day’s low to close at Rs 1,171.25 apiece on the NSE.

The Mukesh Ambani-owned company’s shares have corrected over 28 per cent from its all-time high of Rs 1,608.80 hit on July 8, 2024.

This ongoing decline over the past eight months has resulted in a loss of more than Rs 6 lakh crore in m-cap for the oil-to-textile conglomerate. This is the worst rout Reliance Industries has ever faced in terms of market cap erosion.

By today’s end, RIL’s m-cap stood at Rs 15.88 crore. At its record peak, the company boasted a m-cap of nearly Rs 22 lakh crore.

Biggest Ever M-Cap Erosion In RIL

From its record high, RIL is down by Rs 437.55 per share. With a total outstanding share count of 1,353.24 crore, as per the NSE website, this translates to a total m-cap erosion of nearly Rs 6 lakh crore.

During the Covid-19-induced market crash in 2020, RIL had crashed a maximum of 45.86 per cent from its 52-week highs, over a period of three months. Though the magnitude of the fall was more than the ongoing correction, however, in terms of m-cap erosion, RIL had lost Rs 4.51 lakh crore (assuming the outstanding shares were the same as now).

Prior to that, the biggest correction Reliance Industries ever saw came after the 2008 Lehman Brothers crisis, where its shares crashed 71.8 per cent over a span of 10 months, from mid-January to late October 2008. This time, RIL saw its m-cap eroded by Rs 3.6 lakh crore.

Another major correction that happened in RIL was between March 2001 to September 2001, where it fell 54.71 per cent. In early 2000, from February 11 to March 14, RIL saw one of its sharpest crashes of 47.2 per cent. Again in 1998, from April to October, it crashed 51.8 per cent over the seven-month period.

Why Reliance Industries Shares Are Falling?

The recent decline in Reliance Industries has come amid the broader market correction as foreign institutional investors (FIIs) scale back their exposure to emerging markets due to macroeconomic uncertainties. FII holdings in RIL have consistently been declining for the past five consecutive quarters. From holding a 22.6 per cent stake as of Q2 FY24, FII holdings have dropped to 19.16 per cent, as of Q3 FY25.

RIL’s shares were also under pressure on Monday due to concerns over its battery unit, Reliance New Energy Ltd, potentially facing fines for failing to establish a battery cell plant. The unit was among several companies, including Rajesh Exports and a unit of Ola Electric Mobility Ltd, that won a Production Linked Incentive (PLI) bid for battery cell manufacturing in 2022. However, Reliance New Energy missed the deadline to set up the plant, making it liable for fines of up to Rs 125 crore, according to a Bloomberg report.

Abhishek Tiwari, CBO, PGIM India Mutual Fund says, "Market volatility can be unsettling, but history has shown that staying invested during periods of correction is crucial for long-term wealth creation. Investors who remain committed through market downturns often benefit from eventual recoveries, rather than trying to time the market. In fact, a significant number of the best market days have occurred during or after periods of corrections and recovery."