At a time when global business activities are disrupted and the world is finding measures to deal with novel times of Covid-19 pandemic, India's corporate behemoth Reliance Industries Limited's online platform Jio has attracted major investments from Facebook, Silver Lake and Vista totalling Rs 60,596.37 crore.
Now for investors feeling left out of the partnership with Jio, here are some details on the prospects of great returns.
- Reliance has built three mega growth engines in a single decade - to grab major market share and an unprecedented digital reach of 388 million subscribers (FY20) by connecting Indians at affordable prices with customer-friendly data and network plans in a span of just four years.
- With a diverse product portfolio ranging across groceries, fashion and lifestyle, consumer electronics, and connectivity through 11,700+ stores across 28.7 million square feet, the company continues to serve the vast spectrum of Indian society recording 640 million footfalls (FY20)
- It connects people and businesses by supplying petrochemicals to diversified end-use segments and industries by providing transportation fuels to meet energy demands.
- RIL is working towards building and fortifying the pillars of a strong digital ecosystem in India by attracting new investments and expanding on lines of collaboration to equip MSMEs, and corporates with cutting-edge technologies, asset-light platforms, plug and play techniques to harness nonlinear exponential growth.
- RIL's Oil-to-Chemicals (O2C) business's past investments make O2C biz future-proof. The consumer business segments have been rapidly scaling up on leadership in the past 5 years, with improved cash flow, 2x EBITDA growth, significant liquidity of $23.4bn cash and equivalent and greater shareholder benefits.
- RIL and Saudi Aramco have entered into one of the largest FDI in oil and gas business, an LOI (Letter of Intent) for strategic investment by Aramco into RIL's O2C business at an enterprise valuation of $75billion.
- Further expansion of RIL and BP partnership in India, the largest FDI in the fuel retail sector in India to form a JV 51:49 at an enterprise valuation of $2billion. Even in these challenging Covid-19 times, marquee partners and investors have shown a higher degree of confidence and trust in RIL. The company says its re-rating of stock will continue with an increasing share of consumer businesses in earnings.
- The company has been able to achieve unmatchable cost-efficiencies due to scale with a strong established digital-physical footprint across India and 1mn+ customer touchpoints across the country - every Indian house within a radius of 20km of a Jio touchpoint. The company sees a 40x increase in data consumption in India, and increasing share in global data traffic up from less than 1% to achieve growth of 17%. Also, Jio revenues have seen 2X times growth in EBITDA over the past two years.
- Reliance is well-positioned to leverage on the third-largest $1.5TN retail market opportunity in India by tapping into organised retail growing at 2X times, and $1.2TN unorganised retail market by connecting local Kiranas on the JioMart platform across various channels. Reliance Retail revenues were up by 9X times, EBITDA sees 12x times growth in the past 5 years.
- RIL plans to achieve greater than 70% conversion of crude refined in Jamnagar, competitive chemical building blocks of olefins and aromatics. The company aims to transition in maximising the production of high-value petrochemicals to mitigate the impact of renewables on transportation fuels. Among the first companies globally to adopt the 'Oil to Chemicals' strategy, the value chain integration at RIL helps create annuity-like cash flow. The O2C strategy provides a unique strategic advantage to RIL to enable physical integration at a one-large site as a low-risk brownfield expansion.
RIL is best positioned to leverage on its online ecosystem and offline network to maximise reach across India's large consumer strata. JioFiber is set to capitalize on the home broadband market. Jio is the only operator with an all-IP network, critical for launching 5G services in India and ensuring a smooth transition.