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RIL's 44th AGM Highlights Why RIL Stock Price is Going Down?

RIL's 44th AGM Highlights Why RIL Stock Price is Going Down?

Published on 25 June 2021

The 44th Annual General Meeting of Reliance Industries Limited has been done on Thursday 24th June 2021. Reliance Industries Chairman Mukesh Ambani has made several announcements. Here are the key highlights of this AGM and the reasons behind the fall in the stock price of the company.

Introduction:

Mukesh Ambani-led Reliance Industries Limited has conducted its 44th Annual General Meeting on 24th June 2020. But the share has experienced a fall of nearly 3% in value during the market hours on AGM day, while 2% on the next day. Let's discuss the reasons for the fall in the stock and the highlights of the 44th Annual General Meeting of Reliance Industries Limited.

Highlights of AGM:

1. Clean and Green Energy:

  • Reliance Industries have shown its new interest in a new line of business i.e., Clean and Green Energy.
  • The company has decided to invest Rs. 75,000 Crores in the next 3 years towards the generation of clean energy and green energy.
  • The company is on the route to support the Government’s mission of producing 450 GW by the year 2030.
  • The company has committed that out of 450 GW, RIL will contribute 100 GW which is close to 23%-24% of the total production.
  • For this business, Reliance will be spending around Rs. 60,000 Cr. for 5,000 acres of land in Jamnagar. And rest of 15,000 Cr. will be invested in the infrastructure of this business segment.
  • RIL has now been generating turned positive free cash flows from the Jio business as well, so the company wants to reinvest the positive cash flows into the new energy production business to enter the energy generation market.
  • The country can be the solar hub of the world and Reliance Industries can come out as a major contributor to this growth journey. The company has shown the prospect of becoming a net exporter of Clean Energy in the world in the coming 10-15 years.
  • In 2021, the company is launching a new energy business intending to bridge the green energy divide in India and globally.

2. Retail Segment:

  • The retail business of RIL is currently not generating profits as it is currently in the growth stage.
  • According to Mukesh Ambani, the revenues of this segment can triple in the next three to five years.
  • There is no announcement relating to the issue of IPO for the retail business.
  • The company has added 1,500 new stores, which is amongst the largest retail expansion undertaken by any retailer during this period, taking the store count to 12,711.
  • Reliance Retail continues to be the undisputed leader in organized retailing in the country, with a scale that is more than 6 times in the next competitor.

3. Jio Business:

  • The company is launching 4G smartphones with the collaboration of Google for the users who are looking for an upgrade from 2G to 4G. The smartphone named “Jiophone Next” will be launched on 10th September, the first day of Ganesh Chaturthi.
  • Mukesh Ambani said that the company can onboard over 20 Crore new users on the Jio platform in the coming 1 to 1.5 years.
  • The tie-up of Jio with Google is working on the cloud system for retail whereas, the tie-up with Facebook is working on Whatsapp and Jio Mart.
  • During recent spectrum auctions, RIL invested Rs. 57,123 Crore to acquire a significant additional spectrum, making JIO the largest operator of the 4G spectrum in India.
  • And the company has operationalized nearly 100% of this additional spectrum.

4. Media Business:

  • Network18 successfully overcame the logistical and business challenges posed by the COVID-19 pandemic.
  • No major announcements were made regarding this media business.

Why did the stock price go down?

  • Investors were expecting the new smartphones with Google to be launched on the 5G support systems which was a backlash.
  • It was expected that 5G Smartphones jointly developed by Google and Jio, but instead, Mukesh Ambani committed to launching 4G Smartphones on 10th September 2021, the first day of Ganesh Chaturthi.
  • The new energy business focus was completely new and it will take a lot of time to generate positive cash flows as expected by the investors.
  • There was no update on the IPOs for Retail or Jio as the investors were expecting.

Conclusion:

Reliance Industries on its 44th Annual General Meeting made several remarkable announcements including stepping into the new business of Clean and Green Energy. The majority of the expectation of market participants and investors from the Reliance AGM seemed to have remained unfulfilled which led to a crash in the stock prices.

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