All Eyes on Aramco Deal When Ambani Addresses Reliance Investors

Bookmark

Financial markets will be looking for cues on the fate of Reliance Industries Ltd.’s planned $15 billion deal with Saudi Arabian Oil Co., or Aramco, when Chairman Mukesh Ambani takes the stage to address shareholders Thursday.

India’s most valuable company may also apprise investors of developments including its 5G rollout plan, possible listing of its digital unit and a cheaper smartphone being developed with Google. There’s also interest among investors to know about his succession road map, including the role his three children will play at the helm of the conglomerate in the future.

For the second year in a row, the annual event will be held virtually as the country faces the world’s fastest-growing Covid-19 outbreak and local authorities retain curbs on mass congregations.

Reliance’s shareholder meets -- one of the rare occasions when Ambani, Asia’s richest person, speaks publicly -- have become a platform for the refining-to-retail conglomerate to announce deals, new products and massive investment initiatives. From being held in football stadiums in the 1980s under Ambani’s father to virtual meetings now, the transition is symbolic of Reliance’s own journey as it morphs from being an energy giant to a technology titan.

Key Insights

  • Aramco deal: Ambani first announced at the 2019 shareholder meeting that Aramco would buy a 20% stake in Reliance for about $15 billion. Last year, he confirmed that the transaction hadn’t progressed as planned as speculation swirled on whether it’s happening or falling apart.
    • A local media report this month said Aramco’s chairman may join Reliance board on June 24
  • O2C investors: Ambani has spoken of the possibility of other investors coming in Reliance’s oil-to-chemicals business after it was hived off earlier this year. These details as well as a road map for this unit in a world pivoting toward a green and low-carbon future will be keenly watched.
  • Google phone: Investors may get the first glimpse of Reliance and Google’s co-branded affordable mobile phone that was announced last year as part of a $4.5 billion investment by Google in Reliance’s digital unit. Pricing will be key.
    • The vision of selling hundreds of millions of devices in the early years after the launch is now said to be facing supply-chain snags and rising component prices
  • 5G: Reliance Jio Infocomm Ltd., is gearing to start 5G networks in India, as early as this year. Advance tests have been underway since January and investors will await details of the roll out plan. Reliance is known to undercut rivals on price, so its plans will be critical for the market. Any word on listing Jio will be a major development.
  • E-commerce: Ambani has made bold bets on India’s e-commerce sector. He wants to enlist the support of local mom-and-pop stores and leverage Reliance’s retail and telecom networks -- a vision that has lured in more than $26 billion investment from global giants.
  • Covid-19 drug: Reliance said this month that it was developing a new Covid-19 drug and cheaper testing kits. It’s exploring the use of a tapeworm drug, Niclosamide, as a possible cure for the viral illness. Given the size of the Covid outbreak in India, any pharmaceutical breakthrough would have major impact.

Market Reaction

  • Shares of Reliance have advanced 11% this year compared to almost 10% rise in the benchmark S&P BSE Sensex.
  • Reliance has 25 buy, 8 hold and 4 sell ratings from brokerages, according to data compiled by Bloomberg

Get More

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.