RIL: Is the 'Reliance" on 'Jio' Justified?

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Can anybody having information please let me know about Reliance JIO’s IT team ? Looks like they have fumbled big time with the Jio meet app. It’s a true-blue copy of zoom app and does not work. So much so that they had to pull it back from playstore in USA. I kind of suspect that this company of Baniya mentality (by that I mean hiring cheap IT labour)is not fit to to come up with great software products in global space. The CTO of JIO seems to be a guy with all his experience with Airtel, I wish they hired somebody form Google, Amazon kind of places.

Can anybody please shed some light on this subject so that I’ll set my expectations accordingly.

Thanks in advance.

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While I agree with you on need for excellent talent in technology but having said that, Mukesh has experience only in Reliance and look what he has created!
Also I think all leading investors like FB, Intel etc do not need RIL to create breathtaking products as for that they already have their engines running and excellent ecosystem in US…from Reliance what they need is excellent strategy and execution which is needed in place like India and what they lack in India. RIL so far stands for commitment and execution and creating world class product (in refinery so far) and services. I would expect Jio to eventually create global technology products as well with its strong execution skills (A meeting app is no rocket science and moderate complexity level product. To get it right, you need people with right set of skills and execution, which will come in few years)

Disc: Not invested as interested only in Jio and retail. Do not want to invest in conglomerate. I maybe wrong with my above assessments

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I kind of suspect that this company of Baniya mentality (by that I mean hiring cheap IT labour)is not fit to to come up with great software products in global space.

Even if you get all these right, displacing a well established player is only possible if you have innovative and disruptive product. RIL has neither of these. It’ll be pipe dream to think of a great app coming from them unless they buy it.

Never ceases to amaze me how we Indians love to pull down our own companies. Zoom has been around for 7 years, do we expect JioMeet to be better than Zoom in the first version itself?

I wholeheartedly agree that JioMeet is a shameless copy of Zoom, but here’s a counterpoint: Don’t firms “borrow” ideas from each other all the time? The Chinese tech industry has mastered this but US tech firms do it as well - think iOS and Android, Instagram copying Snap Stories, WhatsApp and WeChat etc. Amazon has gathered data on and then copied all the bestselling products on its platform and sells them under private labels at half the price.

It’s so pervasive you can literally search for “X company” copying “Y company” and find something.

Secondly, from a business point of view, do Jio Apps actually need to be better or just good enough to see massive adoption in India?

https://twitter.com/amitabhk87/status/1279422029171527681?s=20

https://twitter.com/NewsStationTV/status/1280356832234610688?s=20

If so, then does it matter to investors?

This relates the other recurring criticism about Reliance enjoying gov patronage.

Those who think Reliance is a technology company may give it a valuation of what the tech companies get, but it is what it is - an infra company which somehow is so lucky to have all the regulatory stars aligned in its favour.

Of course Reliance bends rules in its favour — but so do large companies everywhere. This is not unique to Reliance or India.

Consider Amazon who most people would recognise as the poster boy of innovation and corporate governance. Amazon pays LESS taxes than Reliance does — with 3.5x revenues, 2x pre tax profits and 10x market cap. They paid 0 taxes in 2017 and 2018. In the US itself, Walmart has paid 50x more taxes over the last 10 years than Amazon and they operate in the same industry.

https://twitter.com/profgalloway/status/1229968765594558468?s=20

Amazon is able to borrow at less than 1%.

Amazon gets access to the kind of workers you want RIL to employ because our best talent goes to the US for higher ed.

Amazon literally ran a national campaign for cities to pitch incentives for them to set up their new headquarters — at least Reliance does such lobbying quietly :slightly_smiling_face:

The same can be said for other large US firms / Chinese firms etc. If India has to even think of competing with any of these tech leaders, we may have to accept some form of protectionism and gov dispensation.

There is also a cynical but valid reason to be invested in companies like Reliance precisely because of their government patronage. This is how things work in India (and globally too). Only if you think this will change does your opinion matter as far as investment decision making is concerned. Markets have not cared about these opinions about Reliance in the past and will not care in the future as well.

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Only time will tell whether this is true.

https://www.bloombergquint.com/business/google-is-said-in-talks-to-invest-4-billion-in-jio-platforms

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A good long term investment idea after listening to the Reliance AGM proceedings:
(1) Investment of Google & Facebook in Jio
(2) All indigenous 5G introduction in India
(3) Jio to export 5G solutions to other countries
(4) Manufacturing smart phone handset 4G/5G…made in india
(5)Reliance Retail, Reliance Smart, Reliance fresh, Reliance trend, Jio Mart… B2C, B2B, O2O…both Brick & Mortar and online Stores in full swing…
(6) Zero Debt company
(7) Continue with energy business with focus on Renewable energy…aim to become a Zero carbon company to be ESG compliant…but the strategy for wind and solar was not clear to me , though he spoke about natural Gas … Restarting kg basin…
(8) Perhaps , shareholders did not like the energy business strategy. People perhaps thought Reliance would exit gradually petroleum business😀
(9) Overall -seems good well diversified and stable Business available at a reasonable P/E of 30 when compared with astronomical P/E figure of of DMart, or Info-edge or Airtel…

The only risk is the quality of execution of the projects by reliance… but considering the partnership with Facebook, Google, Intel…and with a lot of start ups…
… I feel they would do a better job now…

Discl: Invested @1600 level… Added more recently …I may be biased…
I am not a SEBI registered stock advisor

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Disc: Not invested in Reliance.

All these seem good on paper. But this entire Jio driven Reliance rally reminds me of the 2000 telecom bubble:

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it is not very clear how Either Jio or JioMart will really make Reliance a lot of profits. Historically both E-commerce (Flipkart and Amazon) have been loss making ventures. And Im unsure very many people would be willing to pay the premium costs which would come with a 5G connection. It’s unclear that Jio can increase its ARPU significantly since many customers are very price sensitive in India.

Investors would do well to do a SOTP valuation of Reliance and figure out individual valuations for Jio and Reliance Retail as well as the Oil refinery businesses. A P/E multiple of 30 seems too high for Reliance to me prima facie.

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Pardon me if the question is too amateurish -
Does anyone know where the technology centre of Reliance Platforms is located and what is the kind of investment they have made into hiring high quality talent?
Honestly, i have never heard of Reliance hiring high pedigree talent from IIT’s or from large product companies like Google/ Apple/ Samsung etc…
Building a platform of scale as claimed at the AGM today(all done ingeniously in India) takes some effort and i believe they should be having a really high quality talent pool.
On the other hand it is impossible to believe that an institution of the scale and caliber of Google betting large sums of money without doing adequate due diligence. Can anyone help me bridge the gap here?

AJ
Disclosure: Have a small tracking position in Reliance Partly Paid Shares.

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I had few observations based upon which I made my investment decision apart from the future outlook due to Jio and Retail business.
(1) A few months back, the stock was quoting Rs 800… no buyers… Reliance stock doubled within last 3 months and everybody is after the stock now…Why ??? It is not without a reason!:grinning:

It is the market intelligence who have valued the stock because of a lot of development that has taken place during last 3 months…The investors definitely have done their due diligence whether it is Google or Facebook…or the Stock market investors and the fund managers who buy the stock as a part of their portfolios…

(2) For Jio, Mukeshji is keeping Isha and Aakash in forefront…both are just 28 years old… They are being groomed for the future… Mukeshji will ensure that projects don’t fail… It is a question of the future of both his kids…and investors would never trust…

(3) Entering at this level , I am not expecting wealth creation …but I expect 15-20% return … Which I feel I can easily get… Considering the fact that it is a Zero Debt Nifty50.company…and many FII, HNI , pension funds invest in Nifty index funds…I find all mutual fund houses have added this stock to their portfolio… It is among top 5 holdings…

Discl: Invested… Continue to add … But I am not married to the stock…if the business outlook changes, I will change my strategy…
I may be biased… I am not a SEBI registered stock advisor

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Reliance isn’t yet a zero debt company (I don’t think it is even aiming to become one).
It is Net-Debt free.

A couple of good articles →

Discl - My largest holding.

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Am trying to connect the dots/pattern to know about the company more
Before realizing a Black Swan effect - It would be good to come to a thinking rationale

Data is the new oil.
Their 3 year cash flow are negative : -29,405.00 Cr

Assuming the future - This is my guess the future will be more over on technological development in India
That will be developing a smart android mobile phone with 5G facility

India as a country doesn’t have its own set of mobile devices with a added benefit of 5G for reliance - they will be planning to design a mobile phone & much more devices wherein their entry point was to make a JIO phone which has created a good demand in terms of service offering & price - this maybe a new way start.

India might well see exports going out - if they come up with new mobile phone with 5G technology & rest of the other devices.

There are already needed JIO Apps JIO tv, JIO Apps, JIO fiber, JIO setup box and much more with them they would also focus on developing apps or technical devices.

Why i say this? - Stratgic Partnership with Intel,Qualcomm, Google, Facebook wherein Intel(Good at developing processor chips), same with Qualcomm, Google - Good at software applications & search engine, Facebook - connecting the society together

If you hear clearly from Sundar Pichai - He says clearly that we need to organise the social data & bring people to one platform - that would allow people to communicate socially. - He is planning to invest 75k crore in India wherein 40% criteria is met with Reliance & rest we need to see.

There are lot of companies across the world who are willing to invest in India for technological advancement - we just need to keep our eyes open.

There are not just mobile phone that India will advance - there are whole lot of technological advance
can be done such as real time maps for agri, fishing & technological advancement in machinery or automobile. - Hyperloop India has won for the model designing and IITians are currently working on the same - Richard Branson has already invested for it - in Pune Project

Indians are very smart on designing & coding - also the future on technical advancement are AI.
Where it comes in every aspect of the industry

  • Am sorry for such commentary in the forum but this is my thought process and mental model
  • The image is quite big and if we can brainstorm on the patterns about the words that are stressed & communicated by our PM, Sundar Pichai for future of
    India is basically technological advancement - electric cars, automobile software, future of entertainment & OTT.

Took position today - seeing at the future advancement in terms of technological developments to be self sustainability ( Google, Facebook, Intel are such companies who look into the vision and invest when seen an opportunity of growth - my ideas of investment are technical as looking into fundamentals would not make sense to me - purely their business model is changing and completely they will be in a newline )

Please delete this thread if its irrelevant

JIO IPO break up with JIO is likely happen after 3-4 years so for now - this wont be a troublemaker.

Mukesh is smart as since he knew that quarterly results & oil sustainability(electric is the future - oil wont be) in future will be hit - he needed to do something that he had too - to save himself from debt and come out of it. He has done successful raising of capital which is significant in numbers and with major worldwide giants - they are also planning to list in NASDAQ.
Am impressed that he has taken such steps and for every quarter and if you notice patterns at each strike points i.e. after fall till 800 ( he came up with capital raise & rights issue) now again when the stock gave 100% in a range from ( 1600-2000) he needed to do something to retain market share (SO WAITED FOR BIG NEWS ON GOOGLE) similarly June quarter result will be average - which will be neglected due to Google news and he would have already passed the other end.

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Question to those invested in RIL at 1500+ levels

Most of the Marquee investors have invested in Jio platforms which is a subsidiary of RIL. I could not find a clear roadmap for Jio IPO from chairman’s message filed with stock exchanges. Will JIO remain a part of RIL or is JIO IPO imminent? Can RIL sustain these high prices after JIO IPO? Can somebody explain to me why this rally isn’t a good opportunity to exit the stock?

DIS: Invested at 1000 levels

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Currently both Jio and Retail are at an infant stage …
However, in future say after 3-4 years , IPO can not be ruled out …even if there is an IPO for Jio or retail or both… It is a value unlocking for RIL, as RIL would like to remain as a major stake holder…and going by the Reliance traditions, it is expected that the RIL shareholders would get a preferential allotment…even if they don’t get… RIL being a major stake holder becomes cash rich by the share premiums they collect through IPO and consequent dividends they would get from Jio and Retail…and you being the share holder of RIL also get a part of the profit !:slightly_smiling_face:

It is like parent HDFC with its kids HDFC bank, HDFC life, HDFC AMC…
And ICICI Bank having ICICI Pru, ICICI Lombard, ICICI Securities…
Both ICICI bank and HDFC are respected stocks !

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We don’t have disclosure dates about google’s investment : Because if we closely examine the news says Google it will invest in JIO platform. For now its public who are gushing & rushing to invest on news and the movement of stock at it might jump upto 10-20%

So JIO platform wherein Google and other companies invest now the potential value realization will be basically after 3-4 years or currently can we expect RIL to also gain from JIO platform before IPO or is JIO PLATFORM as single entity till then? - please can someone tell me how this works in fundamentals if people have already experience in any case. @1957

In consideration to this a bad example may be Ruch Soya wherein shareholders got the least shares with not much profit.

Below are the HIGHLIGHTS:

  • Google to pick nearly 8% stake in Jio Platforms
  • Jio designs and developes 5G solution
  • Jio will launch 5G in India next year
  • Jio Platforms inviting startups to join forces
  • Jio Platforms to develop captive intellectual property
  • Jio introduces online education, healthcare app
  • Jio to unite producers, customers, kiranas through Jio Mart
  • Reliance unveils Jio Glass, to support 25 application
  • Reliance unveils Jio Glass, to support 25 applications
  • Jio to develop entry-level 4G/5G phones with Google
  • Reliance Retail India’s largest retail biz: Ambani
  • Saudi Aramco deal not proceeding as per earlier timeline
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It appears that the stake sale in o2c business to Aramco has hit the rocks. Given the current situation, this may not happen anytime soon. Also, given the deals frenzy seen on Jio front, it may not be a pressing need anymore.

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Anything which has no future its good to cut off - am not sure what Ambani will do at this instance seeing a rate cute. In whatsoever conditions negotiations can happen & needs to be fast else Reliance will loose market share - Because plenty of retail investors are in double mindset either to hold or sell ( there is no buy call for sure ) given the AGM news yesterday with futuristic pictures & 1 more negative news by Saudi Aramco has surely played in the minds of people there might be negativity and checking patience of retail investors.

Disc : Invested ( Planning to cut short - if deal doesn’t favor this week/next week )

There are plenty of opportunities at pharma at this stage.

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https://www.google.com/amp/s/telecom.economictimes.indiatimes.com/amp/news/reliance-jio-likely-to-increase-user-market-share-to-41-by-fy24-end-analysts/76998386

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Apparantly they had. They are actively filing patents. I was surprised to learn about the below link. Relying solely on any one country may not work in their favour and hence they might have had it in US where the best of the talent pool is available for R&D.

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Can any body explain the debt structuring done by RIL in 2019 where by they have transferred the debt in RIL and made JIO debt free.

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Amazon in talks to buy 9.9% stake in Reliance Retail Arm.
https://m.economictimes.com/markets/stocks/news/amazon-in-talks-to-buy-9-9-stake-in-reliance-retail-arm/amp_articleshow/77127253.cms

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