- Four years ago,
Mukesh Ambani had talked of listing consumer businesses in five years. The market would want to hear more on value unlocking after Jio Financial Services listed in August. - The new energy business is a big play that
RIL has decided to undertake in 2020. Market awaits details on its green energy investments and progress. - Market expects RIL to unveil some new partnerships like the ones announced with Google and Microsoft in the previous AGMs.
It’s that time of the year when investors tune into Reliance Industries annual jamboree to get a sense of what the behemoth plans to do next. On Monday, billionaire Mukesh Ambani, the chairman of RIL, will come before investors to sum up what his company achieved in the previous fiscal year and what it intends to do next. It is an event that has assumed significance as it gives a broad roadmap on investments, partnerships, divestments and new businesses. This time too the market is awaiting a lot more information on the future and some past promises that Ambani has made to investors.
If the past AGMs are anything to go by, Ambani generally uses the platform to announce new partnerships and roadmap for key businesses. In 2020, RIL had announced plans of making mega investments in the new energy business. That year Ambani had announced that the company would invest ₹75,000 crore in new energy businesses. Now the company’s annual report states that it will look to double investments in the same. On the partnerships front, RIL tends to bring out the big guns at its AGM.
In 2020, RIL also announced Google's investment of $4.5 bn in Jio Platforms. At the company’s 44th in 2021, Sundar Pichai along with Mukesh Ambani announced the launch of a 4G enabled smartphone called JioNext which was jointly developed by Google and Jio. Pichai also announced Google Cloud’s partnership with Jio for 5G.
This year, investors are hoping Ambani will give some details on past promises that he has made over the years. Here’s what the market expects from RIL’s AGM.
Update on Listing of Telecom Business – Jio Platforms
In 2019, RIL had announced that it would list its telecom business - Jio – in five years. At the 42nd Annual General Meeting held on 12 August 2019, Ambani had said: “Addressing shareholders, Ambani said, “We have received strong interest from strategic and financial investors in our consumer businesses. We will induct leading global partners in these businesses in the next few quarters and move towards listing both these companies in the next five years.”
Among other investors, Google has invested $4.5 bn in Jio Platforms for a 7.73% stake. In all, Jio Platforms raised ₹1,17,588 crore from 12 global investors like KKR, Intel and Facebook among others.
Similarly,
Four years have passed since Ambani said that it would list its consumer businesses in five years, there has been no mention of this in any other AGM. Bank Of America says: “Most investors expect an update on the timelines for these potential IPOs. We don’t think AGM may be a forum to announce precise timelines and hence don’t expect any updates on IPO timelines.
Update On New Energy Businesses
Reliance has so far concentrated on investing in Jio Platforms and Reliance Retail over the last few years. The capex intensity for both Jio’s 5G rollout and Retail will abate in FY25, which is when analysts expect the company to start investing in new energy business since the company has plans to be carbon neutral by 2035. With the company committing to double its capex from ₹75,000 crore in its new energy business, investors will look at the roadmap and direction on both solar and green hydrogen businesses.
According to JP Morgan, overall capex intensity should fall sharply from FY25 even with a pickup in New Energy capex. Over the last 4 years, RIL’s stated capex has been at ₹4,01400 crore, of which Jio was Rs170,300 crore, Retail was ₹100,800, and O2C was ₹530,000 crore. With the refining and chemicals capex concluding this year, all eyes will be on its new energy business.
Rationale Behind Large Investments in Subsidiaries
The company has made substantial investments in some of its subsidiaries. The market would like to get a sense on why the company is committing large sums of money to these businesses and the plan for these companies. According to the annual report, RIL has disclosed a sharp uptick in investment in its 100% subsidiary Reliance Property & Project Management services by ₹30,500 crore year-on-year.
There is also a substantial jump in its investment in Reliance Strategic Business Ventures to ₹13,708 crore in FY23 v/s ₹1570 crore a year ago. The parent has also invested ₹9145 crore in Reliance Storage. Given that these are 100% subsidiaries of RIL, the market is looking for rationale and road ahead for these businesses too.