For 30 years from 1978 to 2008, Reliance was the darling of the Indian Stock markets. No institutional or retail investor portfolio would be complete without this stock - in fact, most portfolios probably had only this stock!
But from 2009 to 2016, Reliance shares, to put it mildly, languished. And predictably, Indian markets also were on a slow road to nowhere. But it's not as if Mukesh Ambani and Reliance Industries were sleeping. On the contrary, Reliance embarked on the largest capex program ever undertaken by any corporate anywhere in the world!
Between Reliance Industries own shale, exploration and petrochemical projects, plus investments in Reliance Retail and Reliance Jio, plus other investments in Reliance Industrial Infrastructure, Reliance Life Sciences, etc, Reliance Industries expanded their capex program into a mammoth $100 Billion over the last 10 years. When you look at the net debt of $13B today, and get spooked, just remember the context. At the end of such a massive capex program, net debt of $13B is not such a big deal - especially not for a company that is expected to generate $13B in cash profits EVERY YEAR, in 3 years time!
Reliance has reached a point where no one outside the company even understands the company anymore. Unless you are privy to the strategies and the positioning, you simply cannot understand what's going on. Analysts who are conditioned to think quarter to quarter simply aren't capable of understanding a company that thinks in decades, and in orders of magnitude beyond what any other company can even contemplate. Even the large Japanese and Korean conglomerates pale in comparison to the game Reliance is playing today.
When you can't understand things, you have just 2 choices - either accept things on blind faith, or stay away. Till today, people were better off staying away. But now, the capex program is coming to an end. The company that worked hard in the long winter is now positioned to reap the harvest. And this harvest is going to be bountiful. It's now time for blind faith.
But from 2009 to 2016, Reliance shares, to put it mildly, languished. And predictably, Indian markets also were on a slow road to nowhere. But it's not as if Mukesh Ambani and Reliance Industries were sleeping. On the contrary, Reliance embarked on the largest capex program ever undertaken by any corporate anywhere in the world!
Between Reliance Industries own shale, exploration and petrochemical projects, plus investments in Reliance Retail and Reliance Jio, plus other investments in Reliance Industrial Infrastructure, Reliance Life Sciences, etc, Reliance Industries expanded their capex program into a mammoth $100 Billion over the last 10 years. When you look at the net debt of $13B today, and get spooked, just remember the context. At the end of such a massive capex program, net debt of $13B is not such a big deal - especially not for a company that is expected to generate $13B in cash profits EVERY YEAR, in 3 years time!
Reliance has reached a point where no one outside the company even understands the company anymore. Unless you are privy to the strategies and the positioning, you simply cannot understand what's going on. Analysts who are conditioned to think quarter to quarter simply aren't capable of understanding a company that thinks in decades, and in orders of magnitude beyond what any other company can even contemplate. Even the large Japanese and Korean conglomerates pale in comparison to the game Reliance is playing today.
When you can't understand things, you have just 2 choices - either accept things on blind faith, or stay away. Till today, people were better off staying away. But now, the capex program is coming to an end. The company that worked hard in the long winter is now positioned to reap the harvest. And this harvest is going to be bountiful. It's now time for blind faith.
Reliance Industries - Big Brother on the move
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