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Mukesh Ambani succession, spinoffs in focus at Reliance’s shareholder meeting

Mukesh Ambani’s annual speech to investors has evolved over time into a much-anticipated statement about his $222 billion empire, similar to Warren Buffett’s annual letters to Berkshire Hathaway shareholders.

This year,

.’s investors will look Monday to understand the company’s 5G rollout, how it plans to unlock the value of its telecom and retail units through separate listings, and when and how his children will be the will take over the reins.

Anticipation is high as the 65-year-old billionaire who built

in India’s largest company by market value and a superpower conglomerate, the speech has been used for a series of major announcements. These include the launch of its disruptive telecom service in 2016, the proposed investment from Saudi Arabian Oil Co. in Reliance’s energy business in 2019 and a strategic shift to green energy last year.

This year’s shareholders’ meeting comes as the refining-to-retail group faces the twin challenges of a global recession and the blistering rise of Gautam Adani, who earlier this year eclipsed Ambani as Asia’s richest man and emerging as a alternative power center in the business market. landscape.

Reliance investors will have in mind how Adani’s conglomerate split its company into various listings years ago, unlocking value, and will expect “clarity and specific timelines for the next big things” from Ambani’s more centralized holding companies, Kranthi Bathini, stock strategist at WealthMills Securities Pvt Ltd. in Mumbai. Adani’s wealth has increased $58 billion this year thanks to the stock rally, compared to the $3.3 billion increase in Ambani’s.

Here’s what investors expect news:

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succession

The patriarch indicated that succession planning on top of Reliance will be accelerated at last year’s shareholders’ meeting and reiterated this explicitly in December. His three children — daughter Isha and sons Akash and Anant — already hold various directorships in the group’s privately held companies and are increasingly visible in their leadership.

Ambani stepped down as chairman of Reliance Jio

. in June, to make way for his eldest son, Akash, who took over at India’s largest wireless operator. As rumors surrounding Ambani’s health continue to float, investors will look for more concrete steps in the leadership transition, with Isha, Anant and possibly his wife, Nita, taking on more responsibility.

5G rollout

Reliance Jio Infocomm bought ether worth more than $11 billion at a local spectrum auction to strengthen its lead over its smaller rivals —

. and . — in the rollout of faster 5G networks. That will be the key to increasing revenue and luring high-quality users.

Investors will be looking for proof of the pudding here. The technology has yet to yield profits for Asian wireless operations despite multibillion-dollar investments, even for those in China that have been offering 5G service since 2019. Details such as a nationwide rollout date, pricing plans for 5G services and what the demand is for the service will be crucial for Reliance Jio to reveal.

The Ambani kids will be able to demonstrate some of the key features of the 5G services at the meeting, just as they have showcased new telecom products in the past.

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Spin-offs, IPOs

The street has been waiting to get more clarity on Reliance Jio and Reliance IPOs

. especially after the two consumer companies raised $27 billion in 2020 from major global investors.

Both companies are market leaders in their respective sectors with a formidable lead over their rivals. Their listings — or even spin-offs — could boost Ambani’s net worth. “The timelines are critical to getting the mojo back for Reliance stock,” Bathini said. Dependency is up about 11% this year compared to the over 40% increase by top performers in S&P BSE Sensex.

New energy, old energy

The $76 billion pivot toward green energy is the largest transformation Ambani is currently leading. It’s also a difficult transition given the conglomerate’s roots in petrochemicals and crude oil refining and the continued excessive contribution of its fossil fuel-led companies to Reliance’s annual revenues.

Investors will look for updates around last year’s announced plans to build four giga factories to make solar panels, hydrogen electrolyzers, fuel cells and storage batteries. Ambani is also acquiring small green energy companies around the world for expertise and technology. There are also plans to become one of the world’s top producers of blue hydrogen.

Go Global

Ambani emphasized his vision of the “internationalization of Reliance” in his speech last year.

Over the past year, Reliance has been reaching out to major overseas deals, such as a potential takeover of UK drugstore chain Boots, which was never completed. Investors will want to see if the appetite for global acquisitions still persists amid a slowing global economy.

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

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