Amazon, Reliance and Future (of) Retailing


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Current fall in Reliance is excellent buying opportunity. Market is overreacting to this entire transparency issue with GRMs. The reality is that Oil is becoming progressively insignificant in Reliance, and it stands to reason that the news flow in oil is not of much consequence to the stock.

Reliance has spun off its Oil-to-Chemical business as a separate entity, which clears the decks for another massive fund infusion. We can quibble on whether O2C will be valued at $60B or $75B - but the reality is that even at $60B, Sum of parts will make current stock price attractive.

And we have to remember, SOTP only considers RJio, RRetail and RO2C. It doesn’t give any value for the LifeSciences initiatives - which is a large and growing company on its own! It doesn’t include the growing Financial Services business of Reliance - which will shortly get a boost with just Reliance’s current accounts and salary accounts being shifted to it!

Reliance’s internal Finance team is already amongst the largest and most successful team in India - whether it comes to Treasury Operations, Investment Banking, etc. Reliance commodity and currency trading desks are massive - and entire market watches what they do for cues. With their foray into banking, Reliance can easily be amongst top 5 private banks in India, off the blocks!


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Macquarie expects EPS from Core Operations to drop to ₹60 this year. And that’s the reason why they are calling a sell on Reliance.

Even if EPS is ₹60, that implies Reliance is trading at 33x earnings. Which is quite reasonable if you consider that 2 of their businesses are in high growth areas, which typically command higher multiples.

Macquarie also says that there is risk to Reliance because of fears of discounting pressure in JioMart, and tariff pressure in Jio.

Both spaces are choices by Reliance - they are keeping prices low as a growth strategy. And they have the strength to absorb the costs of this strategy.

Capex for 5G is obviously going to be there - but again, after recent fund raising, plus proposed fund raising in O2C, this should be easy for Reliance to digest.


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With 411M customers for Jio, Reliance stands to benefit from ARPU expansion, no matter when it happens. We all know, both AirTel and Vodafone are waiting for chance to raise tariff - so if Reliance raises tariffs, they will also jump and hike tariffs.

Reliance can afford to keep prices low, as a strategy. They would rather make money from Aramco or Jio IPO, than release the stranglehold on AirTel!

Also, while this has been a good year for telecom in general, some aspects of telecom have not worked. Lucrative International Roaming revenues have been insignificant because travel has come to a halt.

I expect Jio ARPU to continue to grow dramatically, and hit around ₹200 in about a year time.


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they have competion already
Airtel Vi so mhm Jio be like caged lion limited .....

if they make ArPU to 200 i be first to leave jio and go to airtel or vi whatever offers cheape r ;xD
lets see when he will announce jio ipo well ultimately he has too


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Amazon faces the heat - Enforcement Directorate takes cognizance of Delhi HC observations - that Amazon’s attempt to control Future is a violation of multi brand retail rules, begins investigations.

I think Amazon will soon realize that they can’t really win this particular battle. No sense in aggravating situation now. Asking for Kishore Biyani to be jailed for approaching courts or writing to SEBI is just stupid!


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Yesterday ruling in Delhi High Court against Future and in favor of Amazon completely changes things.

I have no idea why Reliance is strong in the face of this news! Wonder where Reliance would be if this judgment was against Amazon and in favor of Future!

At this point, prudent thing is to use the current rise in Reliance stock to get out - either partially or fully - or at least hedge by selling some calls against Reliance!

We have no choice but to wait for this to turn.


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This matter is getting “curiouser and curiouser”! And murkier and murkier!

It looks like Amazon is playing a scorched earth strategy - that if they can’t own Future,
they don’t care if Future dies. They will drag this on as much as they possibly can, to ensure that Reliance gets a Future that is not worth getting.

When two elephants are fighting like this, better we stay out of it, and watch from far away!
The only happy ending that's going to come is Amazon paid heavily in compensation for violations and reliance and FRL proceed with deal. So in this case which is a better buy? Reliance which is buying a distressed asset with God knows what synergies it can achieve or FRL at the current levels which can get some hope of appreciation with the new restructure.

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