Reliance Jio To Go Public, IPO Size Likely At $4 Bn Making It The Largest In India Yet

[00:00:00]Okay, well, that's a speech. That's a Reliance Industries AGM and I think it's a big one which has been announced.

[00:00:07]The Geo Platforms IPO is has been announced. The DRHP filing is today. And of course, I mean, there is so much in that Reliance Industries AGM speech. We heard of course from Mr. Mukesh Ambani, chairman of Reliance Industries, but also all of the other top leaders, you know, Anand, Akash, and you know, the other leaders all sort of weighing in on separate businesses on Reliance. But I think the big one of course is the Geo Platform IPO which markets have been awaiting for a long time. And of course, it's being made clear. The I mean, it came on early on in the speech that the DRHP filing for the Geo Platforms IPO is happening today. It's going to be a fresh issue of shares. And it's a big one. I mean, if you look at what street expectations are, I mean, the number is close to about 11 to 12 odd lakh crores.

[00:00:57]And we'll talk more about this in terms of what this means and what this what what this what this really could signal for the company that is RIL as such. What it means for Reliance as such. But I think, you know, it's it's pretty large. I'm just going to take 2 seconds to just tell you four or five other things and then we will bring in my colleagues Sonal and Mangalam who are right here.

[00:01:20]So, the Geo Platforms IPO I think is a clear headline. Sort of a showstopper in that sense. Reliance said that they're expecting to double their consolidated EBITDA over the next 5 years.

[00:01:32]The next phase of growth, I'm just sort of, you know, looking at this from a high level and then we'll get into specifics. The next phase of growth is essentially around five pathways. OTC to new materials. There is new energy. And there is a fair bit about new energy starting to contribute in a meaningful big way from FY '27.

[00:01:50]There is Reliance Intelligence on which a fair bit was time was spent. FMCG and retail.

[00:01:55]And of course, the large multi-sector exports platform is something which was talked about as well. The larger strategic pivot which we heard Mr. Ambani outline, of course, is the fact that Reliance wants to become a deep tech advanced manufacturing, energy, AI, and self-sufficiency company.

[00:02:12]And of course, you know, the three sort of the three top executives, Isha leading consumer, Akash leading technology, and of course, Anant leading energy. And we heard from all three up there on stage outlining the vision for each of the three businesses. So, I thought I'll just sort of outline some of the high-level points here before we go into the individual vertical. So, let me kick that off and welcome in Mangalam and Sorabh who are with me right here in our studio. So, guys, you know, a historic one with the new IPO being announced. And I think we don't have to It's 2026 is the year of large IPOs. NSE DRHP. And now we got Jio Platforms DRHP which is being filed.

[00:02:53]>> You know, we were just discussing whether NSE will be the biggest IPO ever or not. I'm just calculating. You're saying 10 to 11 lakh crores the rough expected valuation of Jio Platforms basis, you know, whatever analysts are estimating. If they're offering 2.9% equity, roughly 3%. So, it could be a 30 to 33,000 crore IPO size issue size. And this is fresh issue that we're speaking about. So, by all means, Reliance Jio's IPO, the Jio Platforms IPO, will actually be bigger than every other IPO that ever we've ever seen.

[00:03:23]>> Okay.

[00:03:24]>> And it looks like it's The interesting thing is I think it's a fresh issue.

[00:03:27]Entirely fresh. So, which basically means that the money comes into the company. There is debt I think there is about >> 27,500 is what they plan to repay with this.

[00:03:36]>> Yeah. So, the debt is about I think around 1 and 1/2 lakh crores. So, that >> On a consolidated level. Yes.

[00:03:41]>> That debt gets repaid. And you know, you you can you can I was just thinking about whether because there are outside investors, etc., as well. But they're don't not selling any of these shares. So, this is a fresh issue.

[00:03:54]Uh so, I think that was interesting in that sense. And it's as you said perhaps the the larger one of the year so far.

[00:04:01]>> And I think the nature of the outside investors that there are, bunch of them are more strategic than financial investors. So, you know, it would be in their interest to continue to stay here.

[00:04:09]And also, Mr. Ambani did speak about when he spoke about the AI bit. He said that partnerships is the way to go when it comes to AI. And they partnered with what? Jio they I mean Jio's partnered with Google, they partnered with Meta.

[00:04:20]And all of them obviously have stake in the Jio platforms business as well. So, makes sense for them to stay put.

[00:04:25]>> And they just invested right through during COVID that we spoke about those strategic investments that came by. But yes, you were making a point.

[00:04:31]>> No, no, no. [laughter] Oil to the oil business all right. That's something you look at closely. And as always, I mean, I think Mr. Ambani said and Anand said that basically is the bedrock of which is funded so that >> It's a cash cow.

[00:04:44]>> Yeah, I mean, the expansion in historically speaking and of course in the future as well. And that remains rock steady.

[00:04:49]>> And that's exactly what they've been focusing on since a long time, right?

[00:04:52]So, of course apart from Jio and AI, they spoke a lot about new energy.

[00:04:57]They put out this timeline back in 2021 that they'll be putting 75,000 crore rupees in new energy business out of which they've already spent 70,000 crore rupees. And now it's the time for that capex to come on stream. So, look at some of the things that they said that solar PV cell and module manufacturing lines they have been commissioned and they are now operational. Nearly 1 gigawatt of modules they have been produced already. And they are building 20 gigawatt per annum of fully integrated capacity. So, it will have poly silicon, it will have wafers, cells, modules, and glass. So, it is this one company that will work on the entire solar module and solar panel chain. And that's very interesting if this comes into the market, what happens to the entire market in terms of pricing because we do have a lot of listed players which are already investing big time in different parts of this supply chain. But Reliance will be the only one which will have an integrated pipeline here.

[00:05:46]They're also talking about their battery storage business. So, the first phase of 40 gigawatt hour annual cell giga factory is on track to be commissioned this year itself. They're committing to scale this up to 120 gigawatt hours. So, three times is what they plan here, and it'll be make Reliance one of the largest manufacturers of lithium ion phosphate battery. So, that's an important metric to track, and they're developing a renewable energy hub across 5 lakh 50 acres, and they're in Kutch.

[00:06:13]Yes, and they'll be 40 billion units of green electricity every year, and peak rate is 55 megawatt peak of solar modules, 150 megawatt of battery containers per day. So, there's a lot that they've spoken about. There's something about alkaline electrolyzer manufacturing giga factory as well. And as you also pointed out, FY '27 is when we'll start seeing these numbers. You know, brokerages haven't really given an SOTP valuation to the new energy business so far. So, this will start, of course, meaningfully contributing this year.

[00:06:41]>> Uh the the so the the new energy business in starting FY '27, solar module revenues begin this year.

[00:06:49]Uh 20 gigawatt per annum of fully integrated solar manufacturing capacity.

[00:06:54]>> Yeah.

[00:06:54]>> Uh and 40 gigawatt hour annual battery giga factory is on track to commission this year. So, a lot of the investments which have been made over the last couple of a couple of years all start to fructify and start to show results and start to contribute uh you know, this year and into next year as well.

[00:07:12]Uh that 5 lakh 50,000 acres I mean it's huge, right? I mean the scale of it is absolutely huge. That's the renewable hub which Reliance is putting together.

[00:07:21]And the numbers are staggering. It's designed to generate over 40 billion units of green electricity annually once fully operational. Uh and you know, they're of course uh targeting a very large deployment rates as well.

[00:07:35]So, I thought I thought apart from the Jio platforms bit, the new energy bit kind of a standout.

[00:07:40]>> Yeah, it was expected also because it was announced 5 years back. Maximum of that capex out of 75 70 they had done till FY26. So, it was time. They have been talking about it in their results that yes, FY27 would be the year when it would come on stream. And the fact that it is integrated is where which sets Reliance apart because they're not just doing one part of the value chain, but they'll be manufacturing it from the start till the end.

[00:08:03]>> You know, having tracked Reliance every quarter for almost 40 quarters in the last 10 AGMs, you look at numbers, the one thing that you know, doesn't fail to surprise us is the surprise factor itself. Every time they talk about a number, they have the vision. You speak about three or four years, five years from now, they'll give you numbers, you'll feel feel that, you know, how are these numbers even imaginable, forget achievable. And somehow, five years later, those numbers are attained. I was talking about, you know, say Reliance Retail back in the day when Reliance Retail would do quarterly numbers which were a lot more than every other retail players annual numbers. Right now, we look at Reliance Retail, it's virtually untouchable when it comes to numbers. 3 lakh 70,000 crores is Reliance Retail's revenue. And for me, that number now stands out for Reliance Consumer Products. So, Reliance's FMCG arm just last year did about 11,450 crores of revenue. This is FY25 that I'm speaking about.

[00:08:58]>> RCPL.

[00:08:59]>> RCPL, the one which was demerged.

[00:09:01]>> Which is where that 1 lakh crore guidance is coming from.

[00:09:04]>> lakh crore guidance is. Now, here's where where things get interesting. Last year, at 11,450 crores, they were at par with say someone like a Dabur or a Marico. Now, this year, they've doubled that number. FY26, Reliance Consumer Products, RCPL has done a revenue of 22,000 crores. Guess what? 22,000 crores, the only company which is above that in that space is obviously HUL, which is much bigger, more than double.

[00:09:30]You have Nestle. You're in touching distance of Nestle. You're at 23,000 crores of revenue for Nestle. Tata Consumer is 20,000 crores. Britannia is 19,500 crores. Dabur and Marico are far long gone. Now 11, 12, 13,000 crores is what they're doing. So in a year they've done you know double and that's faster than any other FMCG company. We're speaking about Campa doing 5,000 crores of revenue. That's a third of what Varun Beverages does for India. And >> No, no, I mean these are each of these businesses are >> targets, right? So >> There was a Kotak note as well that retail spent 1.9 trillion of capex in the past decade and 84% was done just in the five years and that's what you can see in the numbers.

[00:10:08]>> guys, what we're going to do is we'll take a let's just take a quick commercial break. We'll come back and we'll go through each of these numbers in much greater detail. We'll start from the top and sort of you know get you what you need to know as far as the AGM is concerned and the and the top highlights and really takeaways as we look ahead into next week. What does it mean for Reliance and each of these sectors as well because the implication is not just company wise, but these are you know companies which dominate each of these sectors they operate in. Take that break. [music] See you on the other side.

[00:10:59]>> The board of Jio Platforms has approved the draft red herring prospectus earlier today and it will be filed with SEBI today.

[00:11:12]>> Reliance Jio is going public. Mukesh Ambani announces the IPO at the annual general meeting. Fresh issue of 27 crore shares likely to result in stake dilution of nearly 3%. Plans to prepay loans worth 27,500 crore rupees from the proceeds.

[00:11:30]Jio evaluates a foray into satellite broadband, considers a sovereign satellite constellation to bridge connectivity gaps.

[00:11:37]Uh that is from the AGM.

[00:11:41]Reliance Intelligence enters the execution phase, set to commission 120 megawatts of AI compute capacity by the end of this year. Jio also embeds AI directly into the network.

[00:11:57]RIL unveils a new energy plan. Solar cell manufacturing is now operational.

[00:12:02]Plans a 20 gigawatt fully integrated capacity per year. Also pledges to ramp up lithium ion and phosphate battery manufacturing by threefold to 120 gigawatt hours.

[00:12:17]Reliance Retail is building a manufacturing platform for fresh fruits and vegetables. Pledges to invest 30,000 crore rupees into the food and beverages business over the next 3 years. Reliance Consumer Products doubles annual revenue targets uh to 1 lakh crore rupees in sales [music] within the next 4 years.

[00:12:42]From Jio Platforms dialing the Lal Street to the conglomerate exploring a new frontier in satellite constellations.

[00:12:50]Reliance's 49th AGM unlocked a new trajectory for the group. We will discuss key headlines from the big ticket event over the next half hour, but first, let's get you a snapshot of the highlights that we came that we had and we heard from the AGM.

[00:13:09]>> [music] >> Board of Jio Platforms has approved the draft red herring prospectus earlier today, and it will be filed >> [music] >> with SEBI today.

[00:13:28]This is a deeply emotional moment for me.

[00:13:36]In 10 years, Jio has [music] reached an operational scale that is simply extraordinary.

[00:13:43]The Jio user base has crossed 524 million, cementing our number one position.

[00:13:49]>> [music] >> Our CP near-term ambition is to reach 1 lakh [music] crores in revenue by financial year 2030.

[00:14:01]Our long-term ambition is to become one of India's largest FMCG [music] companies with a global platform to match.

[00:14:10]>> [music] >> There are businesses that create value, and then there are missions that shape civilizations.

[00:14:19]Our new energy business is a unique combination of both. It is Reliance's most ambitious generational undertaking.

[00:14:31]>> I carry a dream very close to my heart.

[00:14:35]A dream shared by over 1.4 billion Indians to bring the Olympic Games to India.

[00:14:44]>> [applause] [music] >> Okay, those are highlight snippets, of course, from the Reliance Industries AGM. Mangalam and Sonal are with me here in the studios. Guys, hi.

[00:14:55]And uh you know, what we do first, of course, is tackle the most hotly awaited announcement, which came through, which is the Jio Platforms IPO, the DRHP filing happening today. Uh and and uh this is going to be a big one, I dare say, uh perhaps the biggest of the lot.

[00:15:11]Uh take it away, Sonal.

[00:15:12]>> Yes, could be. And you know, the details are out now. The DRHP has been filed.

[00:15:16]The 27 crore shares will be issued, and it's a complete fresh equity which has been issued. Uh the stake dilution is 2.93% so close to that 3% mark. The company will be using some of its proceeds to repay debt to the tune of 27,500 crore rupees. Uh now of course there have been a lot of There's been a lot of anticipation for this announcement, right? So there have been uh some of the valuation uh assessments as well. It could be anywhere between 9 to 10 lakh crore rupees. This could be one of the biggest IPOs well. But of course we'll get more details on that one. Uh but for now if you look at the uh shareholders, the key stakeholders that is Reliance Industries will be holding around 66.4% stake. We have Meta at around 9.98, Google at 7.73%, Saudi wealth fund has 2.31%. There's KKR as well. The entire list will come up for you on the screen as well. There's TPG Capital. ADIA was a big investor as well. So 1.16% in this one. There's Silver Lake, Mubadala, GIC Singapore.

[00:16:09]All of them holding anywhere between 1 to 2.3%. Uh so much-awaited IPO. It's a long DRHP. We'll go through the details as well. But for now these are the initial details and uh important to track as well.

[00:16:21]>> Absolutely. Uh Mangalam Retail is the other one, right? Uh and I think we've got new targets especially on the RCPL uh business, uh the consumer products business. Take it away.

[00:16:31]>> So for me, you know, Reliance Retail is basically an example of ambition and then a path to execution for them as well. And three things really stand out from the Reliance AGM for the retail and consumer businesses. One, for the retail and consumer business the next leg of growth comes in from manufacturing. And while they have already manufacturing in a lot of food and beverages space, uh they are looking at building a manufacturing platform for fresh fruits and vegetables because this category is in need for waste reduction, hygiene, and higher safety standards. They've already committed about a thousand 10,000 crores of capex in this business over the last few years and will further invest over 30,000 crores in the next 3 years as well to build Asia's largest network of integrated food parks. Also, apart from F food and beverages, they are looking to build future-ready garment manufacturing ecosystems for which they have suppliers in 21 pan-India clusters. And they are also looking at manufacturing of affordable electronics, which include the likes of smart eyewear, televisions, smartphones, and wearables. The second path for growth is quick commerce, which is a fast-growing industry in which JioMart already has over 3,100 dark stores serving 1,200 plus cities across 5,100 pin codes. So, this is something that is likely to continue to grow as well. For Reliance consumer products, the FMCG company that crossed 10,000 crores within just 3 years of its operations has now doubled its revenue and crossed 20,000 crores, 22,000 crores to be precise, and among the largest players in the country right now. Campa itself went to near 5,000 crores of sales and Independence, which is their consumer brand, did about 2,600 crore in sales.

[00:18:05]They are reaching over 3 million plus outlets in the country, a scale to match any other large FMCG company in the country. And here as well, they have a near-term ambition of 1 lakh crore in sales by FY30 and a long-term ambition to become the largest FMCG company in the country.

[00:18:21]>> Mhm.

[00:18:22]You know, I'll just sort of, you know, take you through the just two or three other things because you guys have covered, I think, what is of most, I guess, most interest, but there is a lot of other stuff as well, right?

[00:18:33]Uh the new energy business is something where we have sort of newer targets, but also assurance that the new energy, all the investments which which have been made in the new energy business will start to yield fruit uh starting this year, starting FY27.

[00:18:46]>> Yes, that's what they said, that FY27 will see meaningful contribution coming in from new energy business. Now, remember, 5-6 years back is when they had announced 75,000 crore of capex in the new energy business. A lot of it is what they say has become operational.

[00:19:01]Solar PV cell and module manufacturing lines, they've been commissioned and are now operational. It's a nearly 1 gigawatt of modules that have already been produced, and they are building 20 gigawatt per annum of fully integrated capacity. So it'll start from the most basic polysilicon. They'll go to ingots, wafers, cells, modules, and glass as well. The second is on their battery storage and cell system. So the first phase of that 40 gigawatt hour annual battery storage and cell giga factory is on track to be commissioned this year itself and they have committed it to increase to 120 kilo gigawatt hour.

[00:19:35]Basically they would improve or increase the capacity by three times. This will make Reliance one of the world's largest manufacturer of lithium ion phosphate batteries. They are also developing a renewable energy hub across 5 lakh 50,000 acres and they say they will become the lowest cost sources of round-the-clock green power anywhere in the world. Big numbers here. 40 billion units of green electricity is what this integrated hub will produce every year and the peak installation target for the solar business is 55 megawatt peak hour of solar modules and 150 megawatt hour of battery containers. The biggest number FY 27 is when we'll see new energy business meaningfully contributing to overall financials.

[00:20:16]>> Okay, so from investment phase moving to commissioning phase and that basically means the revenues will start to and earnings will start to flow in I mean this year. Well, I let's just welcome in our guests who are with us.

[00:20:27]Akhilesh Todayja is from with KPMG in India. Deven Choksey of course says with us he's director DRT Choksey Finserve.

[00:20:33]Piyush Pandey senior vice president Centrum India and Gurmeet Chadha of Complete Circle is also with us.

[00:20:39]Gentlemen, great to have all of you here. Thank you very much for joining us.

[00:20:42]Let's just start with what I think is top of mind for everyone and as Sonal said we will the DRHP is now put out much more detail as we go through it.

[00:20:51]But Akhilesh, from what you heard on the Jio Platforms bit which is the DRHP being filed and of course the process being kickstarted, what do you make of it and what should we expect just in terms of the size scale?

[00:21:06]>> I think it's uh you you've spoken about it already. I've been watching that it certainly is going to be one of the biggest IPOs, which I'm sure we're all looking forward to.

[00:21:16]Uh I think it not only talks about the size of the capital infusion, but it talks about the scale India has achieved. And uh to me, it's a massive moment for us to progress not just the telecommunication digital platform, but the entire underlying uh infrastructure of the digital commerce and digital inclusion uh from India's standpoint.

[00:21:37]So, it's a massive move and uh I'm really looking forward to it.

[00:21:40]>> Uh Gurmeet, uh you want to weigh in? I mean, as someone who of course uh is very attuned to what's happening out there in the market, uh what are I was just looking Bharti's trades at a market cap of about 11 11 and 1/2 lakh crores. What's what's the sense, uh Gurmeet, just in terms of the size?

[00:21:57]>> So, you know, you're right, Prashant. I think Bharti could be a near-term beneficiary assuming the market cap is let's say 13 to 15 lakh crores. And Bharti has similar financial metrics and for example, in our food sector. Plus, Bharti's capex intensity has come off significantly as if you adjust for capex incremental, they are doing 40 45,000 crores of free cash flows.

[00:22:19]Uh industry leading output at 260. I think one issue has been in in Reliance's one obviously this Jio uh IPO will lead to some value unlocking. So, it was long awaited. So, it's a very very welcome step. Uh the issue has been largely Prashant on the EPS growth. So, if you see the FY23 EPS, I think it's around 50 bucks.

[00:22:38]And if you see the EPS for FY26, may not be a like-to-like comparison, it's around 60 bucks. If you see the three-year PAT growth, it's been about like I think 5 6% if if my numbers are correct. Uh same is same as for PAT and EPS growth, and return on equity still remains single digit. So, it's very important of Jio has to unlock value.

[00:22:58]It's very important that the energy business investments now start getting reflected as And I think that there was a commentary like uh they've operationalized 1 gigawatt as far as solar is concerned and most of the you know the gigafactories they've done. I think it's the and that is one of the reason the stock has been very flatish.

[00:23:15]You know again the the capex announcement the the whether it is intelligence whether it is on energy and now with Geo out of the way hopefully you know it should lead to I think the street wants more to get reflected in the number. So FI 23 pad was 75,000 crores. I think right the FI's 26 pad is about 95,000 crores. So the growth has been single digit. I think that is where the all the all the investments now need to start getting reflect in actual numbers.

[00:23:45]>> Devin just one question to you on the new energy business which will start to contribute from FI 27.

[00:23:54]Devin what would what would be meaningful?

[00:23:57]I mean you you've looked at the numbers in detail and you you're very intimately familiar with the various verticals etc. What should what should one expect Devin? New energy.

[00:24:09]>> Yep Prashant I think as far as the new energy is concerned I think it's a completely integrated model. I think you have the solar at the first back end.

[00:24:17]Using the solar I think you are also now creating a complete ecosystem starting from polysilicon to ingots to wafers to the module and then also glass. So a complete ecosystem is being created along with BSS I think which is going to be the driver. So in my viewpoint I think if I look at the entire ecosystem which is being created in the renewable segment A first it will be captive consumed because of I think the group's own business is including the Reliance's refinery business and the data center business.

[00:24:51]They're likely to consume this green energy first. In the second stage I think they start selling it to outsiders like I think the Samsung contract for green ammonia and 3 million metric tons per annum the project which is likely to get completed by 2032.

[00:25:07]I think they all will happen in the second stage, but in the first stage as I see it and the very quick back of the envelope calculation if I put across it translate to somewhere around 50,000 crore worth of revenue as at this point of time I think for the company in the renewable. So maybe I think that the full scale whole 75,000 crore investment would end up giving the capex to the revenue ratio of around 1.1 to 1.5 times eventually. So we like I think the kind of contribution starting now in FY 27 and believe that I think it can only scale up going forward with the full year coming in next year.

[00:25:47]>> Gurmeet coming on this the new energy business now that capacity is coming on stream once the one what does it mean for Reliance Industries? Are there any SOTP valuations that you have for the new energy business in the entire share price that you are the target price that you have for Reliance? How big would this business be?

[00:26:05]>> Uh so that's for me?

[00:26:07]>> Yes Gurmeet this is for you.

[00:26:09]>> Yeah. So you know if you see the the breakup I think Jio is roughly I think the street expects between 130 to 150 billion dollar.

[00:26:19]Retail I think is about 100 110 billion.

[00:26:21]I think the announcement of getting to 1 lakh crore by 2030 through inorganic organic is very encouraging. So you're you're at 22,000 crores and you're actually trying to do a 4x quadrupling the business over next 4 years roughly.

[00:26:34]I think that's that's something I would like to watch out for. So retail valuation I think should see further I think incremental upsides there. And then you have the energy business which which So if you see the total market cap of Reliance the the the the Jio as well as the retail business itself is more than that. I mean and then if you remove the let's say take 66% holding. So energy business technically so new energy business I think would would vary I think they were in between you know there was news of stake sale to Aramco then that did not happen. So I think some kind of monetization I think is is due and I think some of the capex intensity the incremental capex intensity is lesser than what they announced I think if I remember correctly in 23. So I I would assign another maybe maybe 70 80 billion dollars to that and that business I think Reliance is quite cheap even if you put a holding company discount off let's say 25 30%. A lot needs to be done and as I said the it's it's the numbers which count. I think it has to start getting reflected in numbers. The EPS growth the bad growth the the return ratios have been pretty low.

[00:27:46]So hopefully I think things will start start now getting reflected numbers as as capex intensity is low going forward.

[00:27:53]>> Right. We'll come back to you all on you know the consumer business and the retail business you know valuations and the projections that were made out there. But Piyush uh Jio I mean just going to ask you uh the street is expecting it to be about a 10 11 to 12 lakh crores sort of company uh valued at an IPO but Reliance is known to you know leave some value on the table for the investors. What do you think is the fair value and you know for all the other investments that they're making in the new energy business as well? How much do you think the street would ascribe to this part of the business?

[00:28:26]>> Uh see for this Jio platform we are giving a valuation of roughly close to 135 billion dollar. That is close to 12 lakh crores. And if Reliance leaves certain value on the table it can be IPO price of say around 11 lakh crores.

[00:28:39]So broadly I would say that is that's sort of like a fair valuation at around 11 lakh crores and plus some sort of I would say near term triggers like their satellite based Leo orbit complications and maybe tariff hikes which they plan to take in the say next few quarters. So those can be positives which can be seen optionally for this IPO valuations.

[00:29:01]But fair valuations I would say 11.5 to 12 lakh crores.

[00:29:06]>> Mhm.

[00:29:06]>> Okay. Okay.

[00:29:08]Pious, they also mentioned 27,500 crores will be used to repay debt rest for general corporate purposes.

[00:29:14]What would the balance sheet look like after that?

[00:29:18]>> I would say debt is not a problem for them. So net debt to EBITDA is very easily less than two times.

[00:29:24]And more importantly I would say the funds would be used for like say these satellite based communications plus expanding their enterprise segment and maybe something on this fixed broadband.

[00:29:36]So probably their 5G capex is mostly sort of over and we expect capacity to actually come down and free cash flow would improve. That is something which would help to expand their next growth plans for the business.

[00:29:49]>> Could there be you know a case of holding company discount for Reliance and as a result of which which are we're seeing a little bit of an underperformance on the stock? Pious, would you be able to comment on that and if yes how much could the impact be?

[00:30:03]>> I would say holding company discount will not be say more than 15 to 50 to 20% is at max.

[00:30:09]>> All right, 15 to 20% is what you're describing as holding company discount.

[00:30:12]Now let's go back to the way in the way you know on the consumer businesses.

[00:30:17]Obviously years ago when we would speak about retail businesses and now that's become a near 100 billion dollars sort of business for the company. Now what's another multi-billion dollar opportunity as per Mr. Ambani himself is the consumer products business. So what was earlier now a retail business and under that was a consumer business. Now that's become a consumer business by itself.

[00:30:38]22,000 crore revenue company which they are projecting to be about a lakh crore.

[00:30:43]This could be another, you know, if you're giving it a multiple of five to six times in terms of sales, this could be another multi-billion dollar opportunity. So, that could add to the overall SOTP according to, you know, the analyst once they start describing this value.

[00:30:59]>> Absolutely. I think the RCPL particularly with runway to 1 lakh crore and most importantly, they're going into the backward manufacturing approach which means that I think they are today earning around 7.5 to 7.6% EBITDA margin between the entire retail and the RCPL.

[00:31:24]Now, it is likely that I think they will be adding up to the EBITDA margin by at least 2 to 3% or maybe a little more given the kind of backward integration in form of product manufacturing.

[00:31:35]Meanwhile, the kind of brands if my last number I think which I looked at from uh annual report and other places, I think they hold more than 3,500 different different brands across the geography including some of the localized brand and that's where I think they are placed favorably, very favorably in fact in my viewpoint. So, maybe I think I would be little more aggressive on this particular number. I feel that road map to 2030 if you consider for retail business with both these companies including manufacturing, I think the enterprise value on the numbers that you're talking about could be well above 12 lakh crores. So, that is where possibly you can possibly count the Jio platform today at 11 12 lakh crores and retail platform of 2030 at another 12 lakh crores. So, total I think the value proposition in the books of Reliance Industries on both these companies is not going to be less than 24 25 lakh crores eventually. I I in the year two or year three from now onwards.

[00:32:38]>> Mhm.

[00:32:39]You know, you know, we're talking about all of this in the backdrop of uh uh the the the space business being in so much spotlight, right? With Space X etc. There was, by the way, uh talk of uh uh a satellite constellation uh which Mr. Ambani spoke about. There's also, of course, Reliance uh heard about Reliance Intelligence and what they're doing in AI, 120 MW of sovereign AI compute infrastructure to be commissioned by the end of this year.

[00:33:05]Uh and uh and and uh the initial uh and what they what they call Nvidia GB300 infrastructure is being operationalized with capacity equivalent to 75,000 H100 GPUs.

[00:33:20]Uh is is the number that I have. And of course, I mean, the ambition is to make AI dramatically more affordable uh by the end of this decade. So, I don't know. Uh Akhilesh, you have any uh any any thoughts around this?

[00:33:33]>> Yeah, absolutely. I think you you talked about three different things. So, one is on the satellite side, the second is on this uh entire data center and creating sovereign AI, and the third is on the pure intelligence. I would say they are all connected in many ways, but let's first talk about the satellite. I think uh there's a need of the hour for us to have uh again uh indigenous uh capacity available in that and the ability for us to drive our own communication channels and not being dependent on completely external or foreign-backed. But, uh it's also going to come at a combination of hybrid, which I think is the right direction uh Reliance is going into, and I think the country needs more such players which can have the ability to put that kind of capital and create that infrastructure and provide inclusion and connectivity everywhere. So, I think that's a good that's a great story.

[00:34:20]Uh when it comes to intelligence as a service, then I think affordability is a great dimension, but also there is this whole sovereignty dimension, which again uh there there's a good signal that we'll be able to possibly achieve both with these kinds of investment. And I think the the world of AI there are choices one can make. You can go to an absolutely expensive cutting edge, but for most computational and intelligence task, we can actually deal with some of these smaller and more affordable models. And when Reliance is talking about intelligence as an affordable service, I again see that kind of an indication coming through. And to combine all of that to have an infrastructure which contains the three things, which is the energy, the compute, and on top of that the capability to build high-speed models, I think I see the convergence happening. So, truly an ecosystem effect. And if I have to summarize, I think we will see a lot more indigenous, sovereign, dependable, and affordable infrastructure driving local capabilities.

[00:35:25]>> Okay. All right. Take that point, Akhilesh.

[00:35:28]Last word from from Deven, Piyush, and Gurmeet before we we wrap on this discussion. The biggest takeaway, of course, is the DRHP filing on Jio Platforms, but anything that stood out for all three of you?

[00:35:41]Gurmeet, let me start with you.

[00:35:43]>> So, I think see if you see Jio contributes about 30,000 crore on a on let's say 90,000 crore, which is a third. Airtel is about 26,000 crore. And with the kind of user base Reliance has, operational efficiency, Jio Fiber picking up, I think Jio will add some upside to Reliance. That's my first cut view on it. Second, I think the what they are doing on building gigawatt scale data centers, and and that too powered by green energy, I think that would be the next medium-term trigger because that's not getting currently reflected both in valuations as well as numbers. Some kind of monetization there, some kind of you know, operational progress there would be the the second one. And I think third one, which is a little more long term would be Reliance Intelligence where Reliance is almost 70% and they can use meta platforms open source models to really develop something really meaningful.

[00:36:39]They'd made some announcements last year. I think you'll probably see more update there and this is what probably the street wants. Street wants the the new age businesses, the the data centers, the hyper scalers, the you know, the the the ability to leverage the likes of investors they have on the cap table. In numbers. I think these are three triggers to me and I think the stock looks pretty subdued largely because of as I said slow EPS growth and and a lot of FI selling. It's it's quite over owned there and I think probably there also we are seeing in my view of maybe at the end now.

[00:37:10]>> All right, the end of selling coming by Devin. Monday, what happens?

[00:37:15]>> Nothing different I guess. I think the pre-money valuation of Jio platform stands at around 11.2 lakh crores and 11.3 lakh crores as I see it. I think from the back of the annual of calculation.

[00:37:28]And maybe I think we are going to be seeing the post money valuation I think with around 33 34,000 crore added to that.

[00:37:37]So frankly, I think the sub 11.4 sub 12 lakh crore of kind of a valuation post money I think as we see it in this particular company. Most important part I think the road map. 76,000 crore EBITDA for this company in a 10 years time of their operation.

[00:37:58]Now getting transformed and possibly becoming at least if not more to 1 lakh 70 to 1 lakh 80,000 crore EBITDA making company by 2030.

[00:38:08]Two or three catalysts I think which are likely to play a major role.

[00:38:12]One of course I think the roll out of complete 5G across all their subscriber base which would increase the ARPU along with I think the increase in the ARPU I think amount that they are talking about.

[00:38:23]Second most important thing, the data consumption stands increase from 42 GB odd per month, I think is likely to increase because of the use of AI in a systematic manner for all the consumers.

[00:38:36]So, that is a second point which I see happening.

[00:38:39]The third point, I think, is more or less all the applications, I think, which they are building, including the AI applications which they are building.

[00:38:47]Once again, suggesting that I think it is creating a larger amount of ecosystem both for the enterprise users as well as for the domestic users. I think, in fact, enterprise users have W A is basically becoming a 10 crore user base, which is going to be over and above 2.7 crore user base, I think, which they currently have.

[00:39:06]And last but not the least, I think, the four fifth one, I think, which is a public infrastructure space where I think the data is being provided, particularly, I think, to enterprise data is being provided to likes of ONDC in particular.

[00:39:20]>> Right.

[00:39:20]>> So, in my viewpoint, I think, if you count each of these modules within the Jio platform, possibly it is suggesting that I think the current EBITDA of 76,500 crores would translate to somewhere around 175,000 crores in 5 years time from now onwards, which is close to current EBITDA of Reliance Industries of around close to 2 lakh crores. That means one Jio platform alone would possibly transform and get into the EBITDA space, which is current entire Reliance Industries.

[00:39:50]>> And Reliance shareholders would be very happy to hear that, Deven. [laughter] Uh I think, you know, we always say when we do these half-hour programs after Reliance AGM that we could probably do many half hours with each with each of these businesses because they're they're very, very large companies and is a true conglomerate in that sense, but uh for now, we will this is it.

[00:40:10]We'll say goodbye. Akhilesh, Deven, uh you know, Piyush and Gurmeet, thank you very much all for joining us here on this special program.

[00:40:21]We'll wrap it up. I thank you viewers for staying with us. More comes up on the other side.