What are forum’s views on following?
Impact of Jio listing oversea and RIL becoming holding company?
Has reliance structured itself to overcome data privacy issue between jio and retail?
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The article itself has outlined one particular way-out!
Ambani, who calls data the “new oil” and has warned of “data colonization” by overseas firms in India, can potentially find workarounds for the legal snarl. One option would be to merge the two Reliance units.
Data sharing between “two legal entities is going to be very difficult," said Abheek Singhi, head of Boston Consulting Group’s consumer practice in India. “My view would be at some point in time, at least from a legal entity perspective, it will come together."
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“Today I am both delighted and humbled to announce that we have fulfilled our promise to the shareholders by making Reliance net debt-free much before our original schedule of 31st March 2021,…
Exceeding the expectations of our shareholders and all other stakeholders, again and yet again, is in the very DNA of Reliance. Therefore, on the proud occasion of becoming a net debt-free company, I wish to assure them that Reliance in its Golden Decade will set even more ambitious growth goals, and achieve them, in fulfilment of the vision of our Founder, Dhirubhai Ambani, to consistently increase our contribution to India’s prosperity and inclusive development,…
Over the past few weeks, we have been overwhelmed by the phenomenal interest of the global financial investor community in partnering with Jio. As our fund-raising milestone from financial investors is achieved, we sincerely thank the marquee group of financial partners and warmly welcome them into Jio Platforms. I also express my heartfelt gratitude to all the retail and institutional investors, both domestic and foreign, for their overwhelming participation in our record-setting Rights Issue,” Mukesh Ambani said.
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Nothing has made me question myself more than this company. Back in March while i was judiciously studying company financials and picking up relatively unknown companies my friend put all of his money in to reliance. His reasons were simple… biggest company in india at half price. I couldn’t see past the debt and I never trusted the ambani family … and 2 of my major caveats are debt and promoters… so I dint buy. He is currently sitting on twice his capital in a debt free company. It’s absolutely crazy. Maybe we just like making things difficult for ourselves by not going for the obvious options. I dunno what it is. I was recently trying to valuate indian tech companies… Info edge is valued at 33x it’s revenue. Indiamart is 10x . Reliance is currently 2x and even though a majority of its revenue is from Oil that’s still a very small multiple for what is shaping up to be the biggest tech company in india. The size of reliance dwarfs the revenue of jio and jiomart right now but we are paying for the future so I really dont know anymore. I almost feel like an idiot buying now so I know I’m still going to wait. Ideally there’ll be a jio ipo and a jio Mart ipo at some point in the future… but I’d imagine those would be priced at a crazy multiple valuation when out(they may not even be launched in India). So yes. I’m kicking myself… I think. Part of me still says it’s an oil company with a smattering of tech and oil companies aren’t worth a multiple in revenue. However, with the fervour it’s generated I don’t see this bubble bursting anytime soon(if it’s a bubble that is) and this could be the biggest wealth maker of the next decade. It looks so simple on paper… biggest company… buy. Yet I know my stubborn self won’t buy it and part of me wishes I was more like my friend when it comes to the stock market.
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Thanks for sharing your perspective, I’m sure many people here made the same call as you! To be honest in hindsight Reliance seems like a smart buy but in the mayhem of March all bets were off and it required tremendous risk appetite to buy it even at the lows.
The size of reliance dwarfs the revenue of jio and jiomart right now but we are paying for the future so I really dont know anymore. I almost feel like an idiot buying now so I know I’m still going to wait.
No one knows what the future holds but one learning for me has been to ignore the current market cap of the company. The common way of saying this is “Don’t go looking for the next HDFC Bank, just buy HDFC Bank”. There are enough examples now globally of the largest companies giving multi-bagger returns and the best thing is that you can make large allocations to such stocks.
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As stated,a lot of people thought the same way incl. me.Let me add few observations here.The parent company or Reliance industries would in curr huge loss in current quarter also as it’s a pure refining company and refining margins are at it’s lowest. This may be worst year for reliance petroleum busiess. Added to that is the inventory loss.Jeo is just a telecom company currently which has been renamed as tech platform having AI, education , tech play etc as if it would move ahead of all tech companies in india while there is nothing much to it’s credit currently. I think it’s a euphoria like that of reliance power of ADAG group in the past. I may be wrong , but all that which is being claimed today and supported by analysts across was not at all visible before the issue ie around 3months before.
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You are not alone as many still have the same consensus. In fact Reliance has always been like that. It has always drawn flacks for whatever big initiatives it has taken so far in its journey.
I guess the 1997 article shared by @enelay is testament to that.
Reliance provokes extreme reactions in India. Either you are pro-Reliance or anti-Reliance. There is nothing in between… But even Reliance’s worst detractor cannot ignore four simple facts: … its costs are internationally competitive in the truest sense of the term; and that has given it consistent long-term value to 2.6 million shareholders. No company can beat that. Not yet, anyway.
It is still fresh in my mind how people shrugged after Jio announced crossing of 100 million users within 6 months of its trial launch. Many proclaimed that people will throw away Jio sims once the free period ends. Market, nevertheless, started appreciating Reliance for its deed and the stock started to trend up after staying range-bound for nearly a decade.
I also happened to be skeptical of Reliance’s success and so avoided the party, and throughout the last 3 years saw how Jio was emerging as the largest service provider, and how the business models of telecom was evolving. The evolution is ongoing till today, however, there remains no doubt that Jio is here to stay.
I agree that the evolution of Jio as a tech superpower is still farfetched but it is indubitable that RIL has the visionary management and firepower to fulfill that dream. At least the investment by Facebook and other marquee investors somewhat vouch for that same fact.
And Reliance is not about Jio and Jiomart. Jiomart is a dream but Reliance is probably the largest player already across the entire retail landscape (Grocery + Fashion) of India. Although Reliance may not be the most efficient of the lot we have seen how richly valued the listed Retail players are (DMart, Trent). And, retail has a long runway in a big country like India.
Finally, RIL already has a number of investments in media and news channels. So, none can stop them from becoming the biggest aggregator in that category, also.
So, RIL is currently in Oil, Gas & Petrochemicals + Telecom + Technology + Retail + Media, all of which has a humongous runway left and that gives RIL a lot of headroom to grow for unforeseeable future.
Disc: Invested after the investment by Vista Equity. Want to see where this FOMO investment takes me!
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After applying very simple logic i am not convinced :
1.Technology sector is very competitive and finding a place in 5 to 10 years is very difficult. survival of the tech company is purely depends on innovation, having lot of money doesn’t matter (Eg Yahoo, Nokia )
2. In Retail sector RIL is having good presence and they may can expand. But maintains margin will be challenging at-least for next 4~5 years.
3. Media and entertainment, now its a technology business only global leaders are going to win.
4.Oil and Gas will continue as big loss making business even after C19 era.
5.JIO Telecom will continue making profit at-least until new technology comes. We have to wait and see how 5G/6G is going change the market.
I think all the hype is created based on JIO success, but if we look at the global telecom market only one or two companies are surviving those who are having nation wide presence and coverage. The point is, success was mainly based on investment rather than innovation.
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Jio
- Tech or not, fact is largest telecom player in India and bell’s and whistles that tells a complete story( content - own/ partners, fiber to home, etc) that appeals to investors. As long as ARPU increases - margins will expand disproportionate.
Airtel has 284M users @ ARPU of 154( qoq 14% growth
Jio has 388M users @ARPU of 130( qoq 2% growth)
Airtel has been vocal of 200 ARPU in short term and 300 in mid term. With major capex behind them( barring 5G - which none other can take up except Jio in current balance sheets) - we can safely assume market knows it and hence break neck investments
Loaded with fresh money and rising ARPU - there is lot Reliance can do than they did with debt heavy structure.
Monetization of Oil and Jiomart/Retail is yet to play out. All the ever increasing liquidity in world of contracting economies - fraction of that will be happy to get in Jio and other businesses of Reliance - now a debt free and marquee investor choice in India.
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Indeed, well I am aware of a family acquaintance who has been always buying RIL since maybe 35 years or so he began investing/trading. So it is like whenever there is market crash, he does not need to think or create a list before hand, he simply buys Reliance…and he did the same in March lows this time. As a matter of fact, 35 years back he was buying only an oil company and now he is buying a tech and retail as well…but all that doesn’t matter to him, what matters is that reliance has made him money always before and again now…
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Reliance Industries Annual Report 2020 Summary Notes
- Reliance is India’s largest and most profitable private sector company. Reliance continues to be a significant global player in the integrated energy value chain while establishing leadership positions in the retail and digital services business in India.
- We are focusing our energies on India’s rising consumer ecosystem and are devising platforms that can truly uplift the quality of life of every Indian.
- 140 patents granted during the year; R&D expenditure – Rs. 2,538 crore.
- Reliance is India’s largest retailer by reach, scale, revenue and profitability; Jio has a future proof all-IP data network with the latest 4G LTE technology; Network18 is one of India’s most diversified Media and Entertainment platform; RIL continued to outperform Singapore complex margin with US$5.7/bbl premium(Refining & Marketing); Owns and operates one of the most integrated petrochemicals facilities globally; Upstream portfolio includes operations in deepwater acreages and the CBM block(Exploration and production).
- We have recently raised over Rs. 1,68,818 crore through investments by global tech investors into Jio Platforms of Rs. 1,15,694 crore and the Rights Issue of Rs. 53,124 crore. With these investments, RIL has now become net debt-free.
- The success of RIL’s Rights Issue becomes all the more significant when seen in the context of the prolonged nationwide lockdown necessitated by the COVID-19 pandemic. It is a vote of confidence, by both domestic and foreign investors, in the intrinsic strength of the Indian economy. I have no doubt that the Indian economy will bounce back to follow a high-growth trajectory in the times to come.
- During FY 2019-20, Reliance executed on the next phase of its growth journey, forging transformative partnerships across businesses. Recognising the pivotal role of Reliance Jio in India’s digital transformation, global technology giants Microsoft and Facebook have partnered with us. With Facebook, the strategic focus of the partnership is India’s Micro, Small and Medium Enterprises (MSMEs), farmers, small merchants and Small and Medium Enterprises (SMEs) in the informal sector. Additionally, the partnerships will empower people and enterprises seeking state-of-the-art digital services.
- Our Consumer businesses continue to establish new milestones every year, with Reliance Retail and Jio collectively having grown by 49.3% y-o-y of the consolidated EBITDA. Consumer businesses now account for 35% of our consolidated segment EBITDA. We delivered a robust performance in our Oil-to-Chemicals (O2C) business despite the weak global economic environment and volatility in energy markets. Our consolidated EBITDA crossed the Rs, 1,00,000 crore mark, a first by an Indian company.
- In a volatile environment, Reliance recorded consolidated net profit of ₹44,324 crore (US$5.9 billion) during the year, registering a growth of 11.3% y-o-y (before exceptional items on account of COVID-19).
- Reliance Retail and WhatsApp have entered into a commercial partnership agreement to further accelerate Reliance Retail’s Digital Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp.
- Reliance Jio has been the key catalyst in creating the broadband data market in India. It is now the #1 ranked mobile telecom operator in the country by both Adjusted Gross Revenue (AGR) and subscribers. Building on this success, Reliance Jio is rolling out its state-of-the-art wireline services across homes and enterprises. All this will help lay a strong foundation for offering platform-based digital services.
- Global economic uncertainty and trade tensions impacted oil demand, which reached its lowest level since 2011, even while the global oil supply grew. Despite the global downturn, RIL continued to outperform Singapore complex margins with a premium of US$5.7/bbl, significantly above its 5-year average.
- The Petrochemicals segment continues to harness the power of chemistry to bring smiles to our customers and end consumers. FY 2019-20 witnessed volatile energy price environment, which echoed in petrochemical feedstock and product prices. Global macro factors such as trade barriers, excess capacities, geo-political uncertainties and regulatory pressure, among others, weighed on demand and price, resulting in decline in petrochemicals margins.
- Oil & Gas : Development of R-Cluster, Satellite Cluster and MJ fields — three projects in KG-D6 are on track to monetise discoveries. These projects will utilise the existing gas production infrastructure of KG D6 block. Further, this infrastructure can act as a hub for development of any discovery from contiguous areas in future. Combined production from these three projects is expected to significantly reduce India’s import dependence and enhance India’s energy security. The peak production from these three fields is expected to reach 1 BCFe per day in 2023, about 15% of India’s projected demand that year.
- Our vision is to build a New Reliance for a New India. Our mission is to GROW INDIA, AND GROW WITH INDIA. I assure you that Reliance will achieve more in its ongoing Golden Decade than it did in the previous four decades.
- In the Energy businesses, Reliance is working to complete the contours of a defining strategic partnership with Saudi Aramco (Aramco). Reliance and Aramco share a common outlook and vision on the evolution of the business in the future with emphasis on higher oil-tochemicals conversion.
- Through the Covid-19 crisis, Reliance operated its O2C facilities at near 100% by shifting products to export markets to sustain operating rates. Scale economics along with strong competitive cost positions across the chain helped Reliance sustain positive contribution through this unprecedented phase.
- We are steadfast in our commitment to capital discipline and financial strength. We remain focused on operating excellence, executing our growth projects, improving returns on assets and shareholder value enhancement.
- Retail – Reliance Retail continues to grow in scale, driven by new store expansion across the geography, improving store throughput and favourable product mix. Operating leverage is resulting in release of strong operating cash flows to continue making requisite investments for securing future readiness and delivering profitable growth. The business continues to improve customer experience across all store concepts and focuses on providing unmatched value proposition, which has resulted in robust growth in footfalls and operating metrics. The year has seen launch of over 1,500 stores across concepts demonstrating Reliance Retail’s superior execution skills. Reliance Retail has the largest customer franchise of over 125 million registered customers who patronise all its diverse store concepts.
- Average per capita data consumption on Jio’s networks is 11+ GB per month(daily time spent/user is ~5 hours) with potential upside from new use cases coming up every day. Affordable and simple pricing plans have been the key to the large-scale adoption of Jio services. Jio has been able to offer these on the back of superior technologybased operating efficiencies, enabling it to offer services at the most affordable price. Jio is rolling out its stateof-the-art wireline services across homes and enterprises. Increasing adoption of broadband services has led to a 50% y-o-y growth in wireless data usage across the country over FY 2018-19.
- Jio has made investments in excess of US$50 billion since inception to create the largest and most advanced digital and connectivity ecosystem in India, with a rich bouquet of successful apps and platforms. New growth areas in NarrowBand (NB) IoT, IaaS/ PaaS, mixed reality, gaming, education, healthcare, agriculture and manufacturing have been identified. This has created a portfolio of world-class, legacy-free and future-proof digital assets. As a part of restructuring of the digital businesses that Jio undertook during the year, a single platform company named Jio Platforms Limited has been created. This has created not just an ability to leverage the subscriber base to create the world’s best and most relevant platforms, but also create a debt-free and financially strong holding company that could pursue growth opportunities and be attractive for strategic investments and partnerships.
- Network18 is spread across content creation and distribution, thereby delivering the best of Indian and global content and brands to discerning audiences across India’s vast demographic diversity. The first half of the fiscal had multiple major sporting events (IPL, Cricket and Football World Cups), which saw viewership and ad-spends gravitating towards the highly concentrated sports genre, and away from the broad-based general entertainment genre. The national elections in May 2019 also boosted ad-spends on news channels during that period, and government/ political ad-spends contracted sharply post the same. On February 17, 2020, the boards of Network18, subsidiary TV18 and cable companies Hathway and Den Networks approved a Scheme of Arrangement for consolidation into Network18.
- Refining & Marketing : We are witnessing a black swan event. The year was characterised by soft regional refining margins and significant price volatility amidst looming trade wars and tightening oil sanctions on a few crude oil producers. The much-awaited rally in refining margins due to the change to bunker fuel specifications from 1st Jan 2020 did not materialise due to lower than expected boost from marine gasoil demand as Very Low Sulphur Fuel Oil (VLSFO) remained the bunker fuel of choice in the new International Maritime Organisation (IMO) low sulphur regime. Global oil demand is expected to fall by 8.6 mb/d in CY 2020 because of lockdowns and travel bans in H1 CY 2020 due to COVID-19 outbreak and widespread shutdown of China’s economy in Q1 CY 2020. US crude supply is expected to decline by 2.8 mb/d y-o-y by Q4 CY2020. Total non-OPEC oil production is set to fall by 3.3 mb/d during 2020. Demand recovery is expected in second half of the year as the easing of lockdowns and travel bans comes into effect.
- Petrochemicals : FY 2019-20 was a challenging year for the global petrochemical industry. While on supply side, we witnessed significant capacity additions, on demand side, geo-political issues caused uncertainty and impacted trade flows and consumer demand. An exceptional development – COVID-19, only further disrupted end use demand and caused uncertainty across the globe. Within a very short span of time, Reliance ramped up special melt blown Polypropylene production to support domestic N95 mask production and eliminated import dependency for a key raw material. With gradual opening up of economies and increasing manufacturing activities, demand for most petrochemical products is expected to recover by the second half of 2020. In the near term, demand for polymers and polyester products is likely to be supported by various applications in the healthcare, hygiene & safety and packaging segment.
- Oil & Gas: The key focus for FY 2019-20 was to monetise the ~3 TCFE discovered resources in our east coast, KG D6 deepwater asset, while sustaining production and maximising recovery from the existing fields. Reliance with a significant gas resource base is poised to be a premier contributor to India’s gas-based economy. Within three years, we are aiming to achieve peak production of gas that will be equivalent to nearly 30% of India’s indigenous production. This will translate into substantial multiplier effects for the economy and lead to energy import savings to the tune of nearly US$25 billion over 10-12 years. RIL’s exploration strategy is focused on catchment areas in proximity to existing KG D6 block to leverage existing infrastructure. RIL won the block KG UDW-1 in the ultradeep waters of KG basin in the OALP round II. RIL is also looking for similar opportunities in the Mahanadi basin where it has discovered resources in the block NEC25 from NELP-I.
- Liquidity & Capital Resources: Managing Liquidity and Capital resources for Reliance and all its group companies continue to remain a key focus area within Treasury. Reliance continues to enjoy a strong credit rating and continues to be rated two notches above sovereign by S&P and is one notch above sovereign by Moody’s.
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Page 74 of Reliance flushed with liquidity is like to make huge acqusition moves and this can further strengthen its position in India’s growing retail and digital services.
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Voda continues to lose, Airtel almost no change, only BSNL somehow showed strong performance
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Looks good as an outdoor replacement wood, but dealer network looks limited
These charts highlight the current standings of the three private telecom companies. Re-posting these from Twitter.
Latest subscriber base (in millions)
Reliance Jio - 387.5
Vodafone Idea - 304
Airtel with - 283.7
ARPU
ARPU = Average Revenue Per User - indicates how much revenue a company can generate from an individual customer.
Churn
Churn = Number of subscribers that terminate or discontinue their service with their carrier. It acts as a proxy to understand how good a company is at retaining its customers.
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Intel Capital. Intel Capital has invested ₹1894.5 crore ($253.5 million) in Jio for a 0.39% stake. This move is more strategic rather than just an investment. Most of Intel Capital’s investments in the past have focussed on artificial intelligence (AI), including edge computing, cloud technology and network transformation — going from 4G to 5G.
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Intel can help Jio launch computing devices (Laptops and Tablets) and accessories like cameras. Might help to note that Jio is already aggressively pursuing its ambitions to become a smart city vendor in which cameras is a key ask. Also, the company has already launched IoT cameras for homes for both Smart TV and surveillance purposes
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