Friday's move in the stock may not have been big in terms of percentage, but it is nevertheless a significant move to break through resistances that have held strong for a long time.
Don't think of Jio as a mobile company - it will be a lot more than just mobile - in fact, mobile will become smaller and smaller as a percentage of this company's revenues after first 3 years. This will morph into India's largest content creation and consumption play. India's largest cloud services play. In addition to India's largest mobile and broadband services play. And much much more than even this.
Reliance Retail is going to be the big surprise - and is expected to rapidly overtake Flipkart to become the biggest competitor to Amazon. And because of not being tied down to the marketplace model, Reliance Retail will be able to invest in in-house brands, and such, to capture much greater share of the customer's money. Already, ReConnect and Lyf are becoming major in-house brands of Reliance Retail. Reliance has its own nationwide after-sales and support infrastructure, something neither Amazon nor Flipkart can offer. This allows them to capture extra revenue from extended warranty, etc. They have their own logistics and delivery infrastructure from godown to store, and will be extending this to cover the doorstep as well. In fact, no one else comes close to owning the entire customer experience the way Reliance can.
The unknown in the pack is Reliance Life Sciences - and it is slowly becoming obvious that this company is one of the biggest players in the world in monoclonal antibodies, biosimilars, and gene therapy technologies. For some time, there has been a buzz that Reliance will shortly come out in the open with details about Reliance Life Sciences, and probably make a big bang acquisition. For almost 10 years, RLS has been flirting with CIPLA, but never pulled the trigger. Now, the time might be close - because RLS simply doesn't have the manufacturing scale that a player of its size needs. Its Navi Mumbai plant may face suspension from the FDA, and that could be the trigger for a quick acquisition - and probably even a reverse merger and back door listing. In fact, talk is that RLS could actually become publicly listed even before its more well known siblings Jio and RRetail.
The bread and butter petrochem business is flourishing, and with completion of capex cycle, is poised to scale greater heights. Reliance has restarted operations in all its retail gas stations, and some of them have become Reliance Retail properties outlets. It is expected that the entire gas station network will be eventually transferred to Reliance Retail.
KG-D6 issues are getting close to a resolution, one way or the other. The arbitration case against the the Government is proceeding quite rapidly, and considering how many cases the GoI has lost recently in international arbitration, it will not be a surprise to anyone if Reliance wins this one. The CAG report itself has gaping holes - where they are comparing prices for contracts placed in 2011 against the much lower prices that prevailed post the oil price crash in 2014! This gold plating dispute actually comes as a blessing in disguise for Reliance, because today oil exploration costs are almost 70-80% lower than they were earlier.
This is a 3x in 3y stock - I expect it will be 3 times where it is today in 3 years time. And there aren't any large cap stocks in the world that one can expect this kind of move. In fact, I must say I would be somewhat disappointed if it only went up 3x in 3y!! This is the sort of stock that you buy, lock it up, and throw away the key!
Don't think of Jio as a mobile company - it will be a lot more than just mobile - in fact, mobile will become smaller and smaller as a percentage of this company's revenues after first 3 years. This will morph into India's largest content creation and consumption play. India's largest cloud services play. In addition to India's largest mobile and broadband services play. And much much more than even this.
Reliance Retail is going to be the big surprise - and is expected to rapidly overtake Flipkart to become the biggest competitor to Amazon. And because of not being tied down to the marketplace model, Reliance Retail will be able to invest in in-house brands, and such, to capture much greater share of the customer's money. Already, ReConnect and Lyf are becoming major in-house brands of Reliance Retail. Reliance has its own nationwide after-sales and support infrastructure, something neither Amazon nor Flipkart can offer. This allows them to capture extra revenue from extended warranty, etc. They have their own logistics and delivery infrastructure from godown to store, and will be extending this to cover the doorstep as well. In fact, no one else comes close to owning the entire customer experience the way Reliance can.
The unknown in the pack is Reliance Life Sciences - and it is slowly becoming obvious that this company is one of the biggest players in the world in monoclonal antibodies, biosimilars, and gene therapy technologies. For some time, there has been a buzz that Reliance will shortly come out in the open with details about Reliance Life Sciences, and probably make a big bang acquisition. For almost 10 years, RLS has been flirting with CIPLA, but never pulled the trigger. Now, the time might be close - because RLS simply doesn't have the manufacturing scale that a player of its size needs. Its Navi Mumbai plant may face suspension from the FDA, and that could be the trigger for a quick acquisition - and probably even a reverse merger and back door listing. In fact, talk is that RLS could actually become publicly listed even before its more well known siblings Jio and RRetail.
The bread and butter petrochem business is flourishing, and with completion of capex cycle, is poised to scale greater heights. Reliance has restarted operations in all its retail gas stations, and some of them have become Reliance Retail properties outlets. It is expected that the entire gas station network will be eventually transferred to Reliance Retail.
KG-D6 issues are getting close to a resolution, one way or the other. The arbitration case against the the Government is proceeding quite rapidly, and considering how many cases the GoI has lost recently in international arbitration, it will not be a surprise to anyone if Reliance wins this one. The CAG report itself has gaping holes - where they are comparing prices for contracts placed in 2011 against the much lower prices that prevailed post the oil price crash in 2014! This gold plating dispute actually comes as a blessing in disguise for Reliance, because today oil exploration costs are almost 70-80% lower than they were earlier.
This is a 3x in 3y stock - I expect it will be 3 times where it is today in 3 years time. And there aren't any large cap stocks in the world that one can expect this kind of move. In fact, I must say I would be somewhat disappointed if it only went up 3x in 3y!! This is the sort of stock that you buy, lock it up, and throw away the key!