Mukesh Ambani to detail post-COVID business plan at AGM; focus on leveraging tech partnerships

Strategic direction post-COVID-19 and further details on asset monetisation are key expectations from the 43rd AGM of RIL, analysts said.

Billionaire Mukesh Ambani is likely to announce plans of leveraging recent partnerships with global technology giants such as Facebook as well as a vision to maximise oil to chemical conversion at his flagship Reliance Industries’ annual shareholder meeting on Wednesday, analysts said.

Mr. Ambani, 63, may at the company’s first online AGM also give a sneak preview of his vision for decarbonisation of energy molecules to create value-added products with almost no carbon emissions.

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Strategic direction post-COVID-19 and further details on asset monetisation are key expectations from the 43rd AGM of RIL, analysts said.

The AGM is “expected to report on progress on asset monetisation (INViTs and stake sale in O2C business), more details on strategic partnerships in digital business, growth plans on financial vertical, oil to chemical integration progress and new technologies,” Morgan Stanley said.

Mr. Ambani had at the last AGM on August 12, 2019 announced plans to sell stake in RIL’s technology venture as well as in its oil-to-chemical (O2C) business to help become net debt-free by March 2021.

The net debt-free status has been achieved much ahead of the deadline thanks to ₹1.18 lakh crore amassed through the sale of 25.24% in Jio Platforms Limited – the unit that houses India’s youngest but largest telecom firm Jio Infocomm and apps – to likes of Facebook, and the country’s biggest rights issue of ₹53,124 crore.

The sale of a 20% stake in O2C business, which comprises its twin oil refineries at Jamnagar in Gujarat and petrochemical assets, to Saudi Aramco for an asking of USD 15 billion has however dragged on, although RIL has said it is on track.

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“We expect investor focus to be on asset monetisation details especially on telecom InvITs and Saudi Aramco stake sale; capital allocation and growth strategy post-COVID-19; plans to leverage the partnerships with global technology peers and integrate its retail, digital and financials business; details on oil to chemicals integration and expansion of oil retail and new energy business with BP,” Morgan Stanley said.

Over the past three years, RIL Chairman Mukesh Ambani focussed on de-leveraging, asset monetisation and strategic direction for various business lines.

The 2017 AGM highlight was 1:1 bonus issue, the launch of JioPhone with free voice calls and energy assets monetisation while 2018 AGM focussed on O2C integration, integration of Jio and offline retail stores and transitioning into a technology platform. The 2019 AGM highlight was the end of the telecom investment cycle, de-leveraging in 18 months and telecom and retail listing in 5 years.

Proceeds from the stake sales in Jio Platforms along with the ₹53,124 crore raised in a rights issue in June and from the sale of a 49% stake in its fuel retail network to BP last summer for ₹7,000 crore, will help the company become net debt-free, Reliance announced last month, once the promised funds come in (75% of the funds from the rights issue will come in next year).

Goldman Sachs said the focus of the AGM is expected to be largely on product launches around RIL’s partnership with Facebook potentially ranging from integration of JioMart with WhatsApp, additional colour on payments business and launch of a large product ecosystem (Super App) where Jio could integrate its services with WhatsApp.

“We also expect additional colour on their vision to maximise oil to chemical conversion (to over 70%) to create an annuity-like cash flow, potentially leveraging its proprietary Multi-zone Catalytic Cracking process and through a potential strategic partnership with Saudi Aramco,” it said.

In the past, RIL has talked about 500 million customers being within its reach. Jio currently has a base of around 388 million subscribers. “We will look for any further colour on Jio’s strategy to bring the next 100 million into the fold,” it said.

Last year, RIL announced plans to reach 20 million homes and 15 million businesses for its Jio fiber product (timeline were unspecified). As per TRAI data, Jio had less than a million subscribers for this product as of February 2020.

RIL at the last AGM stated that Jio is already a software company and had invested in 14 start-ups until then. “We will look for potential colour on the monetisation of its existing internet platforms (music, video, and news apps), and potential foray into any newer verticals,” it said.

In the 2019 AGM, RIL had outlined its ambition to be in the top 20 global retailers in the next five years. Following the recent launch of JioMart, the management is expected to provide more colour on the path to achieve this ambition.

Goldman Sachs said it expects management to provide greater insights into the strategic partnership with Saudi Aramco and how that could fit into their ambition of an industry-leading oil to the chemical platform with over 70% conversion of oil into petrochemicals.

BofA Securities said of the five key initiatives announced in last AGM, RIL completed the strategic stake sale of Jio, petro-retail and moved to zero net debt. “We might get an update on the remaining two – stake sale to Aramco and of Reliance Retail.”

“We may get further updates on how RIL is looking to capitalise on the digital trends and how it is leveraging and nurturing the start-up ecosystem,” it said adding progress/update on other initiatives from last AGM like home broadband, online grocery/new commerce initiatives, Jio First Day-First-Show along with a few new announcements are expected.

JP Morgan said the AGM could have updates on Reliance Retail (large new commerce/e-commerce rollout).

“While we do not expect any large strategic investor in Reliance Retail any time soon, this is a key potential event the investors will be watching, especially as the Jio Platforms stake sale seems done,” it said.

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