Four reasons why Mukesh Ambani’s Reliance Industries is now worth ₹10 lakh crore

• Supreme Court decision to make Airtel and Vodafone pay up spectrum dues gave a boost to RIL stock.
  
• In the last one week, Bloomberg reported that RIL has been trying to sell its media business to two different entities.
  
• Ambani also said that he plans to turn the company virtually net-debt free.
  
• This year, Reliance Retail also crossed ₹2,000 crore in pre-tax profits during the first quarter.
  
  

It was a much anticipated event but the market value of Reliance Industries hit crossed ₹10 lakh crore in today’s trade. In the morning session it ₹10,00,382.68 crore even as the stock went up only by a marginal 0.5% today.

But the company stock withstood erratic sessions of highs and lows and various global cues, to grow steadily for the last four months.

The flurry of good news started after Ambani unveiled his next generation plans at his annual general meeting. But many unprecedented activities also made him the undisputed king of the telecom market.


Rivals loss is Ambani’s gain

Jio was gaining customers, mostly at the expense of Vodafone-Idea, but that came at the cost of very cheap prices. It wasn’t clear if Jio will be able to keep the lead if it raised tariff.

That worry had been laid to rest after the top three mobile service providers ⁠— Airtel, Vodafone-Idea, and Reliance Jio⁠— announced their plans to hike tariffs. It gave a golden opportunity for Jio to make more money while maintaining the lead over others.

Then came the deathly blow for Jio’s rivals from none other than the Supreme Court, which ordered telcos to pay up around ₹92,000 crore ($13 billion) in dues to the Indian government. The companies had lost a decade-old case on how much they have to pay in spectrum fees that left them heavy interest and penalties included.

The other two companies which were much older had to pay a lot more than Jio, which was a blessing in disguise for Mukesh Ambani’s company.

Many stockholders believed that Jio would end up with a virtual monopoly over the market as the debt of Airtel and Vodafone is all set to rise The sentiment effect too boosted the stock value by a great margin for a few weeks.

Sale of Reliance’s media business

In the last one week, wire agency Bloomberg reported twice that RIL has been trying to sell its media business to two different entities—Japanese major Sony and the Times Group. The media business of Network18 that RIL acquired in 2014 is a loss-making entity. The group owns the television channels of Eenadu TV along with those of Network18 like CNBCTV18 and CNN-IBN, Colours and more. It also owns multiple websites like moneycontrol and Firstpost. The news of a possible sale and cash flowing also boosted the stock price.

At the AGM in August, Ambani also said that he has plans to carve out retail and Jio into separate entities to unlock value.

Plan to go debt free, bonuses and IPOs

Apart from announcing various futuristic plans, Ambani also said that he plans to turn the company virtually net-debt free. For a company which is saddled with a debt of around ₹1.5 lakh crore, it is good news for investors. This is especially true in a market where every third company is either weighed down by or going under debt burden.

He also walked the talk by announcing massive deals with international oil majors –British Petroleum and Saudi Aramco which will bring in as much as ₹1.1 lakh crore in commitments.

Reliance Retail starts churning profits

This year, Reliance Retail also crossed ₹2,000 crore in pre-tax profits during the first quarter. “In our core retail, we crossed the best margin ever at 8.9%. We now have 10,644 stores across the country now,” said Alok Agarwal, CFO of the company during the quarterly results.

But this is not the only good news that the business brought. Ambani unveiled his plans to use the synergies of digital business of Jio with retail and take on Flipkart and Amazon in the online space. In fact, the company unveiled plans of a virtual reality powered shopping experience

This, along with promise of public offers and possible bonuses put RIL stock on the fast lane.