Reliance Industries had its 43rd Annual General Meeting (and its first virtual AGM) on 15th July 2020. In this post, we give you the key announcements made in the AGM, our observations, the road ahead for Reliance Industries and what should investors do.
With over 5.5 lakh people watching it live, Reliance Industries AGM was indeed the showstopper event. If the over two-hour long meeting has to be described in a single word, it would be ‘positivity’. There were a slew of announcements made by the Ambani family. Some of the highlights of the AGM were:
- Google to invest Rs. 33,737 crores for 7.7% stake in Jio Platforms
- Developing of Jio TV+ and Jio Glass
- Developed a complete 5G solution which will be ready to launch 5G services immediately on availability of the spectrum
- Will develop an entry level 4G and 5G phone with customized operating system in collaboration with Google for the Indian market
- Target to become a net carbon free company by 2035
- Retail business grew by eight times in last five years.
Our View on Reliance Industries AGM:
Reliance Industries has always been in multiple businesses but the refinery business was always a dominating factor. If anybody who did not know about Reliance’s business was watching the AGM, he would have thought that it was a telecom and technology company also dealing with retail and refinery. The time dedicated to speak about the refinery business was nowhere near the time spent on talking about other businesses. This was a result of a long term strategy executed to perfection.
Over the last few years Reliance Industries has been trying to reduce the dependency on the refinery business. It first focused on the retail business and then came the game-changer – Jio. Jio has received phenomenal interest from investors and industry leaders over the last few months. The stake sale has helped Reliance Industries become net debt free – a goal which was extremely crucial for Mukesh Ambani.
What lies ahead for reliance Industries?
The refinery business is currently in troubled times because of uncertainty in global crude prices. Saudi Aramco deal might not materialize in the way it was initially envisaged. Things will get clear only once global economy stabilizes – which looks a good coupe of years away.
Jio is expected to continue its stellar performance in terms of acquiring market share and adding to its user base. With OTT services, Jio is also strengthening the media business of Reliance. With this Netwrk18 and TV18 will also get a boost over the long run.
While talking about investors in Jio Platforms, Mukesh Ambani also mentioned that this is not the end of investors lining up. He indicated that there is a lot of interest among the investors in Reliance Retail. In the coming couple of years, you may see a series of investments in Reliance Retail.
What happened in recent past?
The price of Reliance Industries shares has seen a massive increase since lockdown – the prices have more than doubled. This has been in sync with news about fresh investments in Jio. Almost 33% of Jio’s stake has been sold in the last couple of months. This leaves limited room for further stake sale.
What should investors do?
With the kind of upmove in Reliance Industries in the recent past, it is likely to cool-off a little. Further, no major news is expected on the Jio front in near future. There could be an odd talk on the street about some action on the retail business of Reliance but barring that no major excitement is visible in the stock. Thus the stock is likely to see some profit booking and the prices may come down. Investors with a view of 5 years and beyond should look to buy Reliance at dips. Investment in Reliance will reap rewards in the form of unlocking of potential of its subsidiaries. Jio Platforms and Reliance Retail may be listed as separate companies. As and when these events happen, the shareholders of Reliance stand to benefit.
Buy small quantities at every dip for the next few weeks is the simple strategy for investing in Reliance.
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