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Founded in 1958 by Dhirubhai Ambani, Reliance Industries Ltd is the biggest listed firm in India by market capitalization. The conglomerate has diverse businesses and is among the largest employers in the country. It is also a part of the Fortune Global 500 list and accounts for nearly 5% of India’s total revenue from customs and excise duty.
Set up as a commodity trading firm under the name Reliance Commercial Corporation, the company then diversified into textiles. Reliance Industries Ltd as we know it today was formed in 1973, but the primary business has now shifted away from textiles to petroleum and gas.
Over the years the oil-to-chemicals company has transformed itself as a market leader in the energy sector and is now vying to become a top player in the digital services sector.
Business model of Reliance Industries Ltd
Listed in 1977, Reliance Industries Ltd has a lot of other listed subsidiaries, such as Reliance Retail, Reliance Industrial Infrastructure, and Network 18, among several others. Some of the sectors the company operates in include hydrocarbon exploration and production, oil to chemicals, digital services, retail, and financial services.
The company has manufacturing facilities across the country, in Indian cities such as Jamnagar, Nagothane, Nagpur, Silvassa, Vadodara, and Hoshiarpur, among others.
The vast expanse of Reliance Industries Ltd allows it to serve a wide audience, right from telecom to gas stations. Its customers are differentiated across the region, ages, economic classes and occupations, among other things. The company relies on aggressive pricing and targeted marketing, depending on the specific brands.
The original Reliance Industries was split between Dhirubhai’s two sons — Anil and Mukesh. However, Anil Ambani’s Reliance has faced financial troubles over the years and is nearly out of the market, while Mukesh Ambani now heads the most successful company, the listed Reliance Industries.
Currently, the most important divisions in the company are Jio Platforms, Reliance Retail, Reliance Industrial Infrastructure Ltd, and Reliance Solar.
The oil to chemicals division brings in nearly half of the company’s revenue, followed by retail, digital services, media and entertainment and oil and gas. The company was the first Indian firm to cross Rs 10 tn ($122 bn) in 2019.
The company’s motto is “Growth is Life”, to capture the evolution of the company from a textiles firm to a major player in the energy, materials and retail sectors. As of 2022, the company ranked 104 in the Fortune Global 500 and ranked 54 in Forbes Global 2000.
Reliance has delivered massive returns to investors, with its market capitalization growing at a CAGR of 32% since its IPO. The company claims it indirectly generated employment for over 5 million people. Among other things, one in every two Indians consumes content coming from the Reliance media and entertainment stables.
For FY2022-23, the company had total revenue of Rs 9,74,864 crore ($117.32 bn) on which it made a net profit of Rs 73,670 crore ($8.8 bn). For the quarter ended March 2023, the company reported a revenue of Rs 239,082 crore ($28.77 bn), up nearly 2.8% YoY, and a profit after tax of Rs 21,327 crore ($2.56 bn), up 18.3% YoY.
The growth was driven by a rise in digital services, retail segment and the companies O2C business.
“There was continued volatility in the global markets amidst disruptions in trade flows and economic uncertainties. Despite the headwinds, Reliance was able to deliver another year of remarkable performance both on operating and financial front,” Chairman Mukesh Ambani said in the results release.
Stock movement of Reliance Industries Ltd
Reliance Industries Ltd has seen its share price more than double in the three years until 2021. However, in 2022, the company’s stocks have fallen by 4.77%. The current market capitalization of the company is Rs 16.26 tn ($195.68bn).*
The price-to-earnings ratio of the company stood at 26.82, whereas the price to book ratio is pegged at 2.12. The share price of Reliance stocks is currently around Rs 2,551 ($30.70). Since September 2021, the stock has risen over 24.72%, hitting an all-time high on July 1, 2023.
India’s HDFC Securities, which is bullish on the stock, in a recent report said, “Our ADD rating on Reliance Industries (RIL) with a price target of INR 2,700/sh is premised on (1) recovery in the O2C businesses, (2) EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition, and new revenue streams, and (3) potential for further value unlocking in the digital and retail businesses.“
What is the outlook for the conglomerate?
Over the past couple of years Reliance Industries Ltd has heavily invested in telecom and digital services, and Mukesh Ambani during one of the Annual General Meetings said that the company will also be focusing on green energy while expanding tech offerings.
In 2015, oil and gas made up 95% of the group’s revenue, but now the digital services section has gained ground making up over 20% of the total revenue share.
Back in 2017, Ambani had said, “The foundation of the fourth industrial revolution is connectivity and data. Data is the new natural resource. We are at the beginning of an era where data is the new oil.” The digital push comes from Jio Platforms, which operates the telecom division as well as several other video and music streaming services. The company even launched the JioPhone, a budget 4G-connected mobile device, which was mildly successful.
Reliance also became the first retail chain to accept India’s digital rupee (the CBDC developed by the Reserve Bank of India).
