In 2016, the year when Reliance Jio started commercial operations, the buzz was that the outsize investment in an already competitive business like telecom could never yield a proper return. But Mukesh Ambani’s anticipation of the future and his execution capabilities showed up the sceptics — and how. Eight years later, Jio’s network, with at least 490 million users, carries 8% of global mobile traffic and clocked revenues of Rs 1 lakh crore with net profit over Rs 20,000 crore in fiscal 2024. In fact, retail and telecom are two of Reliance Industries’ (RIL) largest businesses and both were born under Ambani’s stewardship. They and, to a large extent, the new energy business are shining examples of how the elder son of Dhirubhai Ambani has wheeled around his gigantic enterprise, and re-imagined it, in a manner that has few parallels in India’s business history. While earlier he used to say data is the new oil, at the 47th Annual General Meeting of RIL on Thursday, Ambani spoke about transforming RIL into a deep-tech company by embedding innovative technologies in every single business to maximise value; and building an artificial intelligence (AI)-native digital infrastructure for all businesses.
Apart from its biggest and oldest unit, oil-to-chemicals (O2C), RIL’s major businesses are in digital, retail, media, and green energy. Three of these already have a valuation of over $100 billion each. Consider the journey Reliance Retail has covered. After a slow start, the entity recorded revenues of Rs 3.06 lakh crore and net profit of Rs 11,100 crore in FY24. And Ambani expects the new energy business to be as profitable as its O2C unit over the next five-seven years. The O2C business earned Rs 5.64 lakh crore revenue in FY24, out of the group’s consolidated revenue of over Rs 10 lakh crore.
All this puts RIL on track to more than double in size before the end of the decade. And the group, which took over two decades to be amongst the top 500 companies globally, is hoping to earn a place in the world’s top 30 league in the near future. RIL’s market capitalisation under Mukesh Ambani has grown from just $5 billion in March 2002, when he took charge, to $245 billion now. That’s fantastic indeed for a group which started as a synthetics textile company in the 1970s. But to jump from 50 into the top 30, RIL would need to touch $366 billion. That can prove to be a tall order.
The AGM speech of course had its share of disappointments as it was silent on listing of the telecom and retail arms as was widely anticipated. Clearly, the company feels the timing isn’t right just as yet, which is understandable. But once they are listed, valuations could rise for both businesses, since investors assign higher valuations to focussed businesses than to conglomerates with disparate divisions. Many also say the AI and cloud-related efforts will help Jio retain customers, but they are expected evolutions which have already been implemented by competitors. That’s also a fair point. And Jio’s rivals said it got undue advantages from the telecom regulator in the initial years. It has also been alleged that the retail foreign direct investment policy was framed in such a way that it suited Reliance Retail. Some of this may be true, but given the way he has transformed RIL, no one can deny that Mukesh Ambani knows how to make the elephant dance.