Reliance Industries 46th AGM: IPO Listing, O2C Biz Stake Sale Among Key Expectations From Mukesh Ambani

Reliance Industries (RIL) will be in focus on Monday as the conglomerate will hold its 46th annual general meeting (AGM). Traders are expecting an IPO timeline for retail and digital business, while insights into 5G rollout, projects under Clean Energy business and potential stake sale in O2C business among other key factors. Also, positive announcements related to the newly demerged business Jio Financial Services will be keenly watched. Markets will react to Mukesh Ambani's speech to shareholders.

On Friday, RIL share price closed at Rs 2469.95 apiece down by 0.4% on BSE. The company continues to be the largest in India in terms of market share. As of August 25, 2023, the market cap is over Rs 16.71 lakh crore.

In the trading week that ended on August 25, RIL shares dipped by over 3.3% on the BSE.

RIL is holding its 46th Annual General Meeting (Post-IPO) on Monday, 28th August 2023 through Video Conferencing ("VC") / Other Audio-Visual Means ("OAVM") from 2:00 PM onwards.

Here is what to expect from the RIL AGM.

According to Santosh Meena, Head of Research, Swastika Investmart, this event is poised to have some impact on the market's trajectory. Anticipations are high as Reliance Industries is anticipated to unveil a series of significant announcements during its 46th AGM. These revelations may encompass updates on IPO timelines for their telecommunications and retail businesses, insights into the progress of the 5G rollout, and revelations about investments in clean energy initiatives.

The reason behind why investors expecting a timeline on IPOs is because in the AGM for 2019, the Ambani-backed conglomerate announced to take its telco and retail bussiness for public listing in next five years. Since then, four years are already behind, and investors believe key announcements regards to this on Monday is most likely.

Also, last week, a report stated that is planning to sell a further 8-10% in Reliance Retail Ventures to retire debt, fund expansion and prepare for market debut. Thereby, some key updates on the listing of retail arm from Ambani is expected.

In case of updates on 5G rollout, one of the most anticipated deal is with Netflix on prepaid bundled recharges, as per reports.

Further, for newly demerged business Jio Financial Services, whose stock price has been battered since listing last week, Shreyansh Shah, Research Analyst, StoxBox said, "We feel that there seems to be some value buying by investors at these levels. Also, in the upcoming AGM which is scheduled for Monday, we believe some rub-off effect is seen on the stock's price on optimism of some investor-friendly announcements." Shah believes that a further roadmap is expected to be announced in the upcoming AGM of Reliance Industries.

Further, JM Financial in its research note, highlighted key expectations from RIL's AGM. These are --- a) potential timeline for listing of Retail and Digital businesses; any potential strategic stake sale in O2C business; b) update on progress of various projects underway in Clean Energy business with timelines around project commissioning and potential earning potential from this projects; c) launch of affordable 5G smartphone along with attractive 5G tariff plans; and d) any further update around succession plans.

Also, ICICI Securities in its latest research note said, "Multiple investments in the various areas of the "New Energy" segment are starting to play out gradually, with others segment (housing the new energy and other smaller segments) having grown in revenue by ~10x over FY18-23, even as profitability from this segment remains some time away. The upcoming AGM of RIL on the Aug 28, '23 should provide some more meaningful update on the pace and direction of investments in this segment over the next few years."

Should you buy RIL shares?

Brokerage JM Financial said, "We reiterate BUY (unchanged TP of INR 2,900/share) as we believe concerns on debt are overdone as we expect RIL's net debt to peak in FY24 and then decline gradually as capex will not only moderate (Rs 1.3 trillion -1.4 trillion p.a. vs. Rs 2.3 trillion in FY23) but, importantly, also be fully funded by a gradual increase in internal cash generation. RIL's guidance on keeping reported net debt to EBITDA below 1x (0.9x in Mar'23) also gives comfort. Be that as it may, we believe RIL could still drive a robust 14-15% EPS CAGR over the next 3-5 years with Jio's ARPU expected to rise at 10% CAGR over FY23-28 with ARPU being on a structural uptrend given the industry structure, future investment needs, and the need to avoid a duopoly market - A Giant Digital Leap."

Further, it added, "strong growth momentum continues in the company's Retail business as RIL is driving omni-channel capabilities across segments."

It cited that RIL has reiterated its capex commitment of USD10bn over 3 years in the New Energy business, and its readiness to double its investment, to achieve Net Carbon Zero target by 2035; it has also restated the business roadmap and reported rapid progress in the setting up of the 5 Giga factories. In regards to the O2C business, it highlighted that global petchem margins weakened during FY23 amidst lower demand from China while refining margin was strong due to rebound in global demand for transportation fuels aided by supply side concerns. As far as its Digital business is concerned, it reiterated the target for a pan-India 5G rollout by Dec'23, make India 2G-mukt by enabling existing 250 million 2G feature phone users
to transition to 4G and connecting 50 million MSME businesses through its Enterprise connectivity solutions; however, it has doubled its target of connecting homes from 50mn earlier to 100 million.

Disclaimer:

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