Reliance Industries(RIL) held its first-ever Virtual AGM on Wednesday. It was a much anticipated AGM considering the $20 Billion fundraiser for its telecom arm Jio, so much so that RIL shares soared north of 2% the morning of the AGM. Between Mid-June and the AGM, the share price of Reliance appreciated by almost 15.8 per cent, such was the optimism for the AGM.
What followed the AGM was a fall of about 8% in its share price. It cost Mukesh Ambani $2.5 Billion and his 6th richest-man status. The fall also cost investors Rs. 1.26 Lakh Crores. One of the chief reasons for the fall in the share price is attributed to a lack of insight into other entities of Reliance Industries such as Petroleum. Likewise, the analysts and market watchers say the reason is the stalling of the much anticipated Saudi-Aramco deal, wherein it was expected to sell 20% stake of its Oil and Petroleum business to the multinational petroleum and natural gas player. This was due to slumped crude oil demand and consumption because of the COVID-19 pandemic outbreak. The deal was valued at around $15 Billion.
The AGM, on the other hand, showed extremely insightful propositions in the AGM keeping the long term prospects of investment tidy. This AGM was set apart from the previous ones considering that it focused on reduced dependence on China for 5G spectrum which is expected to be up and running by 2024-25 according to the Chairman and MD Mukesh Ambani. The AGM also included Facebook founder Mark Zuckerberg and Google CEO Sundar Pichai
Here are some useful insights into Reliance Industries’ AGM 2020:
- Reliance Industries had a plethora of positive insights, one such being the Rs 33,737 cr investment of Google for 7.7% stake in Jio.
- Reliance is now a net-debt free company ahead of its expected schedule.
- Ambani introduced its own homegrown cloud video conferencing app JioMeet.
- What caused a stir was the announcement of Jio pitching for 5G spectrum in the near future. Likewise, this is a welcomed decision as it dilutes the ambition of Chinese Multi-National Huawei in the wake of the recent political stir between India and China. In addition, they announced that the trail run should start by year-end, following which 5G services would be launched.
- JioTV Plus. It is an OTT content aggregator pitching in content from other OTT platforms Netflix, Amazon Prime, JioCinema, Voot, Zee5, SonyLiv, JioSaavn, Disney Hotstar, and YouTube.
- JioGlass. JioGlass is a mixed reality solution featuring AR and other Audio Visual Capabilities. However, the AGM did not reveal many technical details on Jio Glass.
- JioMart’s tie-up with Whatsapp. JioMart the companies’ retail wing announced a collaboration with Whatsapp and its inclusion of local convenience stores as well.
- It announced Embibe, its online education platform.
- RIL is the first Indian Company to cross 1 Lakh crore consolidated EBITDA.
- It is the highest payer of customs and excise of Rs 21,660 crore and the highest payer of GST and VAT 69,372 crore.
Times are tough because of the pandemic. Firstly, with rising unemployment, reduced production and decreased demand for crude oil, Reliance’s Q1 performance is still commendable. Above all Reliance perfectly monetized in the crisis through JioMart, JioMeet and Embibe as well. Secondly, the support of Google(Sundar Pichai) and Facebook(Mark Zuckerberg) feeds the long term sentiment of promoters and investors. The short slip in the price can be attributed to rising volatility and you can soon expect a high recovery in the share price as well.