The Run-Up To Reliance Share Prices Before AGM

Reliance Industries Ltd will soon be hosting its 45th AGM or annual general meeting. Like every year, this AGM is one of the most anticipated events for the company shareholders and also markets in general. After all, the company has had a history of making investors richer by 23% on average, within a quarter of the AGM date. The company’s AGMs are known to be announcement-heavy, thereby amassing substantial investor attention.

What is an AGM?

An AGM or annual general meeting is held for a company’s shareholders once every financial year. Irrespective of the number of shares held by a shareholder of a company, he/she has the right to attend this meeting. Shareholders get to know about the company’s vision, business focus areas, and more about its management, and future plans. Depending on the announcements made in AGMs, the company’s stock prices may be impacted following investor sentiments on the company’s future.

Did you know

Historically, RIL investors have gained an average of 23% in the 3 months preceding the company’s Annual General Meetings. 

#1 Future of retail and telecom segments

The 2022 AGM may see the company disclosing its future plans around its retail and telecom businesses that operate under the names Reliance Retail Ventures and Jio Platforms. Investors are awaiting announcements on the company’s plans to derive value from these growing sectors, specifically on the targeted timelines. 

Did you know

As per results for the financial year ending March 31, 2022 (FY22), 60% of RIL’s revenue and 50% of its EBITDA come from the company’s O2C (Order-to-Cash) business with a strong focus on areas like petrochemicals, retail fuel, and refining. Telecom and retail businesses make up about 34% of the company’s revenues and 45% of its EBITDA. 

#2 Oil business

Last year, the company did not go through the demerger proceedings in its oil-to-chemicals business. Experts think there are chances that the company may rework these plans this year considering a favourable environment due to crude oil price corrections. Also, supply constraints and increasing global demand for refined products could work in the company’s favour.

JP Morgan’s analysis shows that RIL is one of the best-positioned companies to cater to the rising demand for refined products. This is primarily because of the company’s prowess in buying and processing arbitrage barrels combined with a diesel-intensive slate and continued export focus. 

#3 Foray into energy

In the previous year’s AGM, RIL chairman, and MD, Mukesh Ambani announced that the company would launch a new energy business to tap into the domestic and global green energy divide. 

In the upcoming AGM, investors can expect the company to announce further plans to accelerate this space as rival company Adani is aggressively growing in the energy space. Adani Green Energy, in partnership with TotalEnergies, agreed to invest $50 billion in India in the next decade to enhance green hydrogen production.

RIL may enter the green or renewable energy space, specifically to cover areas like solar and wind energy apart from green hydrogen.

Interesting fact

As per a report published by the Institute for Energy Economics and Financial Analysis (IEEFA), India’s investment in the renewable energy space has risen more than 125% year on year and as of March’22 stands at a whopping $14.5 billion. This spike has seen a significant contribution from Adani and Reliance. 

RIL’s financial performance

FY22 saw RIL cross the $100 billion gross revenues and a consolidated EBITDA of $16 billion. This is attributed to its performance in the O2C, telecom, and retail segments. Experts are positive about additional growth in the coming years, mainly from new energy business growth.

As per a report by Morgan Stanley, RIL’s EBITDA may likely touch $20 billion by end of this year. This is expected from high margins in its refining business, rising telecom revenue, gas market tightening worldwide, rapidly rising digital commerce and improved spread of petrochemicals. 

Conclusion

Various industry experts and analysts are positive about the RIL growth story continuing in the future. Mutual funds continue to hoard the company’s shares, indicating chances of higher returns in the future. The bullish trend is also being vouched by large brokers like JP Morgan and Morgan Stanley. Investors are, therefore, waiting excitedly for the second-most followed yearly presentation of India, none other than Reliance AGM.

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