The focus of Reliance’s AGM will be on Mukesh Ambani’s succession plan and spinoffs

Investors in Reliance Industries Ltd. will be watching on Monday for information about the company’s 5G deployment, how he intends to divide his retail and telecom businesses to maximise value, and when and how his children will take over the reins.

Like Warren Buffett’s yearly letters to Berkshire Hathaway shareholders, Mukesh Ambani’s once-a-year speech to investors has grown over time into a much-anticipated declaration on his $222 billion enterprise.

Investors in Reliance Industries Ltd. will be watching on Monday for information about the company’s 5G deployment, how he intends to divide his retail and telecom businesses to maximise value, and when and how his children will take over the reins.

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The 65-year-old billionaire, who transformed Reliance into India’s largest firm by market value and a formidable conglomerate, has used the address for several significant announcements, so anticipation is high. These include the introduction of his innovative cellular service in 2016, the planned investment in Reliance’s energy sector by Saudi Aramco. in 2019, and a strategic switch to green energy last year.

A global economic downturn and Gautam Adani’s meteoric rise, who earlier this year surpassed Mukesh Ambani as Asia’s richest man and is now establishing himself as a rival power centre on the corporate landscape, present the refining-to-retail group with two formidable obstacles as they prepare for their annual shareholder meeting.

Investors in Reliance will expect “clarity and specific timelines for the next big things” from Ambani’s more centralised holdings, according to Kranthi Bathini, equity strategist at WealthMills Securities Pvt Ltd. in Mumbai. Investors will remember how Adani’s conglomerate split its business into different listings years ago, unlocking value. Adani’s wealth has increased by $58 billion this year as a result of the stock market bounce, while Ambani’s has increased by $3.3 billion.

Investors can anticipate the following news:

The Succession

At the shareholder meeting the year before and again in December, Ambani made it clear that succession planning for the top position at Reliance would be accelerated. His three children, son Akash, daughter Isha, and grandson Anant, already hold a variety of directorships in the group’s unlisted businesses and are increasingly taking on leadership roles.

Ambani ape the Walton Family for succession

In June, Ambani resigned as chairman of Reliance Jio Infocomm Ltd. to make room for his eldest son, Akash, who assumed control of India’s largest telecom provider. Investors will be watching for more specific actions to be made in the leadership transition, with Isha, Anant, and possibly his wife, Nita, taking on more responsibilities, as health worries about Ambani continue to circulate. Taking inspiration from the Walton Family, the owners of supermarket chain Walmart.

Introduction of 5G

Reliance during the spectrum auction, Jio Infocomm spent over $11 billion on airwaves in an advantage over its smaller rivals, Bharti Airtel Ltd. and Vodafone Idea Ltd., having purchased almost half of the 5G airwaves. The deployment of faster 5G networks will be essential for increasing sales and attracting high-value users.

IPOs

The market has been waiting for further information about Reliance Jio and Reliance Retail Ltd.’s initial public offerings, especially after the two consumer businesses raised $27 billion from illustrious international investors in 2020.

Both businesses enjoy a sizable advantage over their competitors and are market leaders in their respective industries. Their public offerings or even spinoffs may increase Ambani’s wealth.

“The timelines are crucial to getting the mojo back for Reliance stock,” Bathini said. Reliance has gained just about 11% this year compared to the more than 40% rise by top performers in S&P BSE Sensex.

Green Energy

The largest reform Ambani is currently in charge of is the $76 billion shift toward renewable energy. Given the conglomerate’s roots in petrochemicals and crude oil refining, as well as the current disproportionate contribution of the fossil fuel-led industries to Reliance’s annual revenue, the transition is also challenging.

The green push

Investors will be watching for developments on the four gigafactories that were announced as part of last year’s announcements to produce solar modules, hydrogen electrolyzers, fuel cells, and storage batteries. Ambani has also been aggressively buying up tiny green energy companies around the world for their knowledge and technology. Additionally, there are aspirations to rank among the top producers of blue hydrogen globally.

Global Outreach

In his speech from the previous year, Ambani stressed his goal for the “internationalisation of Reliance.”Reliance has shown interest in significant international transactions during the previous year, including an unfulfilled possible acquisition of the British drugstore giant Boots. Investors want to know if there is still a desire for international acquisitions amid a weakening global economy.

Then there’s always the possibility of a curveball at the meeting, said Bathini. “Never underestimate the power of senior Ambani” to surprise the market, he said.