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Reliance Industries Limited and Facebook
This is a long thread that may interest $FB and $RIL.NS investors.
This is a long thread that may interest $FB and $RIL.NS investors.
1/n…
Yesterday, $FB bought a 9.99% stake in Jio Platforms for $5.7Bn, a subsidiary of Reliance Industries Limited (RIL). The market gets it, and the FB stock soared by 8% on the news…
Yesterday, $FB bought a 9.99% stake in Jio Platforms for $5.7Bn, a subsidiary of Reliance Industries Limited (RIL). The market gets it, and the FB stock soared by 8% on the news…
2/n…
What does Reliance Industries do, and who is Mukesh Ambani?
RIL is run by Mr. Mukesh Ambani, the son of one of the greatest entrepreneurs to have ever walked on this planet, the late Mr. Dhirubhai Ambani…
What does Reliance Industries do, and who is Mukesh Ambani?
RIL is run by Mr. Mukesh Ambani, the son of one of the greatest entrepreneurs to have ever walked on this planet, the late Mr. Dhirubhai Ambani…
3/n...
Dhirubhai was a self-made billionaire whose story would make you think that Slumdog Millionaire had it very easy…
Dhirubhai was a self-made billionaire whose story would make you think that Slumdog Millionaire had it very easy…
4/n…
RIL began its operations as Reliance Commercial Corporation in the 1960s as a spice and polyester company. Then it became Reliance Textiles, and later Reliance Industries…
RIL began its operations as Reliance Commercial Corporation in the 1960s as a spice and polyester company. Then it became Reliance Textiles, and later Reliance Industries…
5/n…
RIL went public in 1977, and was among the first few companies to go public when BSE (Bombay Stock Exchange) was established. For its investors, RIL compounded wealth a several thousand times from 1977 - 2002…
RIL went public in 1977, and was among the first few companies to go public when BSE (Bombay Stock Exchange) was established. For its investors, RIL compounded wealth a several thousand times from 1977 - 2002…
6/n…
When Dhirubhai passed away in 2002, Mukesh Ambani and his brother, Mr. Anil Ambani took over RIL operations. In 2008, both brothers split; Anil Ambani’s net worth has dropped from $25Bn to $200Mn while Mukesh Ambani’s net worth has doubled in 2020…
When Dhirubhai passed away in 2002, Mukesh Ambani and his brother, Mr. Anil Ambani took over RIL operations. In 2008, both brothers split; Anil Ambani’s net worth has dropped from $25Bn to $200Mn while Mukesh Ambani’s net worth has doubled in 2020…
7/n…
RIL’s Jamnagar Refinery, under Mukesh Ambani, is the largest oil refinery in the world, and is the biggest free cashflow generator for RIL. Take money from here and put it in every industry you get your hands on - this is RIL…
RIL’s Jamnagar Refinery, under Mukesh Ambani, is the largest oil refinery in the world, and is the biggest free cashflow generator for RIL. Take money from here and put it in every industry you get your hands on - this is RIL…
8/n…
Since scale is RIL’s problem in India, Mukesh has chosen deployment over ROIC, which I think is not the worst strategy, if your WACC > ROIC, but it’s not the case with RIL…
Since scale is RIL’s problem in India, Mukesh has chosen deployment over ROIC, which I think is not the worst strategy, if your WACC > ROIC, but it’s not the case with RIL…
9/n…
It’s the largest company in India, but it makes less than it’s cost of capital, partly bec of reinvestment and scale, and primarily because RIL doesn’t care and lacks good governance. It’s Average ROIC in the past 10 years is 9%, nearly equivalent to its cost of capital…
It’s the largest company in India, but it makes less than it’s cost of capital, partly bec of reinvestment and scale, and primarily because RIL doesn’t care and lacks good governance. It’s Average ROIC in the past 10 years is 9%, nearly equivalent to its cost of capital…
10/n…
Fortunately, as a FB shareholder, you don’t need to think much about RIL. Back to Ambani - Mukesh Ambani is a terrific deal maker, and he is one of the smartest guys in the corporate world; humble too…
Fortunately, as a FB shareholder, you don’t need to think much about RIL. Back to Ambani - Mukesh Ambani is a terrific deal maker, and he is one of the smartest guys in the corporate world; humble too…
11/n…
Getting a $57Bn valuation amid Covid-19 pandemic is no small feat for an Indian company. In my opinion, barring a few powerful politicians, Mukesh Ambani, is the most influential/powerful man in India, and probably Asia (ex. China)...
Getting a $57Bn valuation amid Covid-19 pandemic is no small feat for an Indian company. In my opinion, barring a few powerful politicians, Mukesh Ambani, is the most influential/powerful man in India, and probably Asia (ex. China)...
12/n…
He doesn’t play in big boys’ league; he is the league. If you ever become rich and powerful business person and want something done in India, he is your man…
He doesn’t play in big boys’ league; he is the league. If you ever become rich and powerful business person and want something done in India, he is your man…
13/n…
What is Jio Platforms?
There is no “new telecom” company in the world. Most telecom companies were established a few decades ago, and kept adding services to their voice cables. Jio, launched in 2016, is different…
What is Jio Platforms?
There is no “new telecom” company in the world. Most telecom companies were established a few decades ago, and kept adding services to their voice cables. Jio, launched in 2016, is different…
14/n…
Jio is one of the most modern data network in the world because it was “built as a” data network. The voice/text is free, unlimited. Yes! I’ve lived in the NYC where I paid upto $110 $VZ bills per month, for years…
Jio is one of the most modern data network in the world because it was “built as a” data network. The voice/text is free, unlimited. Yes! I’ve lived in the NYC where I paid upto $110 $VZ bills per month, for years…
15/n…
I’ve had friends who’ve visited me from Europe and the US, and they’re amazed by the mobile data plans. One of my friends from Germany couldn’t stop talking about “gigs” and I looked at her as if she, not I, were from the third world…
I’ve had friends who’ve visited me from Europe and the US, and they’re amazed by the mobile data plans. One of my friends from Germany couldn’t stop talking about “gigs” and I looked at her as if she, not I, were from the third world…
16/n...
By the world standard or any measure, India is a very poor country, but everyone who can pay $4/Month has unlimited internet and voice access here. Sorry! That’s the best we’ve done until now. But I consider this progress…
By the world standard or any measure, India is a very poor country, but everyone who can pay $4/Month has unlimited internet and voice access here. Sorry! That’s the best we’ve done until now. But I consider this progress…
17/n…
Some people can’t afford food to eat, but can access internet for free, if they know how to. That’s primarily because of Jio. With 400Mn users and a plethora of 100s of products/services from RIL, Jio offers many digital services such as JioMart, an ecomm platform...
Some people can’t afford food to eat, but can access internet for free, if they know how to. That’s primarily because of Jio. With 400Mn users and a plethora of 100s of products/services from RIL, Jio offers many digital services such as JioMart, an ecomm platform...
18/n…
Movies/Content/Media businesses, Streaming Business, Retail Businesses with hundreds of brands, Grocery Business, Payments Business, etc. that may help FB lay a strong foundation to build a super-app over time…
Movies/Content/Media businesses, Streaming Business, Retail Businesses with hundreds of brands, Grocery Business, Payments Business, etc. that may help FB lay a strong foundation to build a super-app over time…
19/n…
Here’s a link to the list of all the businesses RIL and “Digital Services“ Jio Platforms operates: https://www.ril.com/OurCompany/ProductsAndBrands.aspx
Here’s a link to the list of all the businesses RIL and “Digital Services“ Jio Platforms operates: https://www.ril.com/OurCompany/ProductsAndBrands.aspx
20/n…
While most of Jio’s digital businesses are going to be failures - similar to failures Telecom industry is accustomed to in software delivery, there are obvious silver linings in an underserved and under-penetrated digital services’ market like India...
While most of Jio’s digital businesses are going to be failures - similar to failures Telecom industry is accustomed to in software delivery, there are obvious silver linings in an underserved and under-penetrated digital services’ market like India...
21/n…
What’s the deal with FB and is the valuation excessive?
FB has been running into huge regulatory hurdles not only in the US, but also in India. With this partnership, I suspect, the pressure going forward, on FB, is going to be less than it’s been…
What’s the deal with FB and is the valuation excessive?
FB has been running into huge regulatory hurdles not only in the US, but also in India. With this partnership, I suspect, the pressure going forward, on FB, is going to be less than it’s been…
22/n...
Zuckerberg has paid ~22x EBITDA for Jio, or ~3x the replaceable cost of the tangible assets. It’s not a stretch to take a stab at the Indian market and eliminate major obstacles, when Airtel, the second largest, well-managed telecom in India, trades at 12x EBITDA…
Zuckerberg has paid ~22x EBITDA for Jio, or ~3x the replaceable cost of the tangible assets. It’s not a stretch to take a stab at the Indian market and eliminate major obstacles, when Airtel, the second largest, well-managed telecom in India, trades at 12x EBITDA…
23/n…
Through its minority stake of <10%, FB doesn’t run into many issues and gets to learn more about its own potential users - which could be every Indian who uses internet…
Through its minority stake of <10%, FB doesn’t run into many issues and gets to learn more about its own potential users - which could be every Indian who uses internet…
24/n…
While urban/semi-urban middle/upper class continues to use WhatsApp, FB, Messenger, and Instagram, FB has faced huge competition from the Chinese social platforms such as Like, Helo, Tik Tok, etc. in the lower income group of users…
While urban/semi-urban middle/upper class continues to use WhatsApp, FB, Messenger, and Instagram, FB has faced huge competition from the Chinese social platforms such as Like, Helo, Tik Tok, etc. in the lower income group of users…
25/n...
With Jio’s pre-installs, this could/will change, as the CAC goes to zero or even negative as FB gains from stake in Jio, which probably will go for IPO. It’s a master move from Zuckerberg - “Heads, I win a lot; tails, I don’t lose at all.”...
With Jio’s pre-installs, this could/will change, as the CAC goes to zero or even negative as FB gains from stake in Jio, which probably will go for IPO. It’s a master move from Zuckerberg - “Heads, I win a lot; tails, I don’t lose at all.”...
26/n…
The worst case: Jio goes to zero, it negatively impacts FB’s marketcap by 0.90%. The prevalence of WhatsApp in India is unlike any other I’ve seen. WhatsApp to India is what probably Michael Jackson and Seinfeld were to America - A Culturally Influential Game Changer!…
The worst case: Jio goes to zero, it negatively impacts FB’s marketcap by 0.90%. The prevalence of WhatsApp in India is unlike any other I’ve seen. WhatsApp to India is what probably Michael Jackson and Seinfeld were to America - A Culturally Influential Game Changer!…
27/n…
I won’t be surprised if India becomes the primary hub for FB to test its payment network and maybe its currency, Libra. Don’t count “Dating” out either! No one knows about Tinder in rural India...
I won’t be surprised if India becomes the primary hub for FB to test its payment network and maybe its currency, Libra. Don’t count “Dating” out either! No one knows about Tinder in rural India...
28/n…
I have no special insight here, but a super-app like WeChat is at least a minuscule possibility - a huge optionality for FB. If not, it’s not a requisite for FB to succeed further...
I have no special insight here, but a super-app like WeChat is at least a minuscule possibility - a huge optionality for FB. If not, it’s not a requisite for FB to succeed further...
29/n…
So why India is of interest to $FB?
Many people focus a lot on ARPU; it’s a wrong metric to focus on when you look at international growth. You have to see things in context of ROIC…
So why India is of interest to $FB?
Many people focus a lot on ARPU; it’s a wrong metric to focus on when you look at international growth. You have to see things in context of ROIC…
30/n…
That is the reason why great management teams at $BAM, $MSFT, $AAPL $AMZN, $GOOG, $SPOT, $BLK, $BX, $CG and $NFLX are all bullish on India…
That is the reason why great management teams at $BAM, $MSFT, $AAPL $AMZN, $GOOG, $SPOT, $BLK, $BX, $CG and $NFLX are all bullish on India…
31/n…
Indian Economy - A Small Backdrop: India’s economy has grown and so has it’s headline stock indices - Nifty and Sensex. India is among the top 10 great investible countries where indexing works. Here are Nifty50 and Sensex Graphs:
Indian Economy - A Small Backdrop: India’s economy has grown and so has it’s headline stock indices - Nifty and Sensex. India is among the top 10 great investible countries where indexing works. Here are Nifty50 and Sensex Graphs:
32/n…
And however flawed, corrupt or poor a country is, wherever indexing works, it’s somewhat reasonable to assume that there is some economic system and rule of law are in place that keep the economic engine running…
And however flawed, corrupt or poor a country is, wherever indexing works, it’s somewhat reasonable to assume that there is some economic system and rule of law are in place that keep the economic engine running…
33/n…
Even fair to argue that somewhat meritocracy is in place because a lot of these businesses in Indices are run by first-gen self-made entrepreneurs. And I can say so because my Dad grew up in slums/projects of New Delhi and has done well to for himself…
Even fair to argue that somewhat meritocracy is in place because a lot of these businesses in Indices are run by first-gen self-made entrepreneurs. And I can say so because my Dad grew up in slums/projects of New Delhi and has done well to for himself…
34/n...
India has always paid its debt ahead of due dates and has never defaulted on its obligations. Barring some catastrophe, neither it is ever likely to default because of the conservative nature of the Indians…
India has always paid its debt ahead of due dates and has never defaulted on its obligations. Barring some catastrophe, neither it is ever likely to default because of the conservative nature of the Indians…
35/n…
India’s Debt-to-GDP has consistently stayed at ~66% while it’s GDP has increased at fastest rates in the world. India is among the conservatively-run economies. It lowers the consumption compared with the developed/some developing countries, but also lowers the risk…
India’s Debt-to-GDP has consistently stayed at ~66% while it’s GDP has increased at fastest rates in the world. India is among the conservatively-run economies. It lowers the consumption compared with the developed/some developing countries, but also lowers the risk…
36/n…
Why has FB decided to invest now?
What’s intrigued me to write this thread is the timing of the deal. Jio has connected 1.35Bn Indians through its fiber - that’s the primary reason. One of the other reasons is that while the US enjoyed a booming decade…
Why has FB decided to invest now?
What’s intrigued me to write this thread is the timing of the deal. Jio has connected 1.35Bn Indians through its fiber - that’s the primary reason. One of the other reasons is that while the US enjoyed a booming decade…
37/n...
India’s economy has been just fine, and since 2016, we’ve faced an economic slowdown. Markets may do what they do, but everyone knows the US is going into a recession; no one knows how deep/how long…
India’s economy has been just fine, and since 2016, we’ve faced an economic slowdown. Markets may do what they do, but everyone knows the US is going into a recession; no one knows how deep/how long…
38/n…
Long-term, I stay bullish on the US more than any other country in the world. I’m not a macro guy, but at the moment, Zuckerberg is right that it’s one of the most opportune time to look at investing in India…
Long-term, I stay bullish on the US more than any other country in the world. I’m not a macro guy, but at the moment, Zuckerberg is right that it’s one of the most opportune time to look at investing in India…
39/n…
Look at the 40-Year graph here that compares the US GDP Growth, Oil Prices, India’s GDP Growth, and the US 10 yr bond yield: (Graph from @MarcellusInvest )
Source:
Look at the 40-Year graph here that compares the US GDP Growth, Oil Prices, India’s GDP Growth, and the US 10 yr bond yield: (Graph from @MarcellusInvest )
Source:
40/n…
“The red arrows are the 4 economic booms we’ve had in India. 1st: 1982-86, 2nd: 1993-96, 3rd: 2003-08, 4th: 2009-11. What’s remarkable is that before every boom, the US had a recession…
“The red arrows are the 4 economic booms we’ve had in India. 1st: 1982-86, 2nd: 1993-96, 3rd: 2003-08, 4th: 2009-11. What’s remarkable is that before every boom, the US had a recession…
41/n…
Why does American recession leads to Indian boom? There are 3 things that an American recession does to a poor country like India. 1st - Low oil prices, which currently will be a 3% GDP tailwind for India…
Why does American recession leads to Indian boom? There are 3 things that an American recession does to a poor country like India. 1st - Low oil prices, which currently will be a 3% GDP tailwind for India…
42/n…
2nd thing that a US recession does for India is - American Bond Yields collapse. It went from 2.5% to negative. It forces US fund managers to put capital in Asia…
2nd thing that a US recession does for India is - American Bond Yields collapse. It went from 2.5% to negative. It forces US fund managers to put capital in Asia…
43/n…
We’ve seen wherever the no. of deaths are going down, the market is soaring 25% within a few days - we’ve seen that in Korea, Philippines. We’ve seen Seth Klarman, James Montier talk about moving some capital out of the US markets to Asia…
We’ve seen wherever the no. of deaths are going down, the market is soaring 25% within a few days - we’ve seen that in Korea, Philippines. We’ve seen Seth Klarman, James Montier talk about moving some capital out of the US markets to Asia…
44/n…
3rd - When Fed cuts rates, Reserve Bank of India also does to stimulate economies. As we look out 6 months, 12 months out, 2 years out, I think we will see India’s 5th boom.”
~Saurabh Mukherjea, @MarcellusInvest
...
3rd - When Fed cuts rates, Reserve Bank of India also does to stimulate economies. As we look out 6 months, 12 months out, 2 years out, I think we will see India’s 5th boom.”
~Saurabh Mukherjea, @MarcellusInvest
...
45/n…
While I have no doubt that the US will grow, I suspect India’s growth to be higher, and that makes sense because we’ve digital infra in place with 1/6th the size of the US economy with 5x the population…
While I have no doubt that the US will grow, I suspect India’s growth to be higher, and that makes sense because we’ve digital infra in place with 1/6th the size of the US economy with 5x the population…
46/n…
One more positive that I see have come out for India during Covid crisis is: Rational people of the world have begun taking note of how India is handling Covid-19. You can either keep watching news or look at the reality on the ground…
One more positive that I see have come out for India during Covid crisis is: Rational people of the world have begun taking note of how India is handling Covid-19. You can either keep watching news or look at the reality on the ground…
47/n...
It’s an extreme undertaking to implement lockdown in a country of 1.35Bn people with 20 different languages and 100s of dialects to unite against a single/common enemy - Covid-19…
It’s an extreme undertaking to implement lockdown in a country of 1.35Bn people with 20 different languages and 100s of dialects to unite against a single/common enemy - Covid-19…
48/n…
Chaos in many places is inevitable because we’re not as civilized as Scandinavians. Here is what @BillGates wrote about how India has handled Covid:
Source: https://www.indiatoday.in/india/story/bill-gates-writes-to-pm-modi-commends-his-leadership-in-dealing-with-covid-19-1669905-2020-04-22
Chaos in many places is inevitable because we’re not as civilized as Scandinavians. Here is what @BillGates wrote about how India has handled Covid:
Source: https://www.indiatoday.in/india/story/bill-gates-writes-to-pm-modi-commends-his-leadership-in-dealing-with-covid-19-1669905-2020-04-22
49/n...
This sort of disaster management definitely instills a lot of confidence in the business leaders like Hastings, Flatt, Gates, Zuckerberg and Bezos...
This sort of disaster management definitely instills a lot of confidence in the business leaders like Hastings, Flatt, Gates, Zuckerberg and Bezos...
50/n...
Usually, I keep my opinions to myself and present smarter people’s opinions; I've tried to assimilate information here.
I wrote this thread on @JerryCap 's suggestion, so blame him for hacking your feed today. ;)
The trolls will be ignored like dog isht!
THE END
Usually, I keep my opinions to myself and present smarter people’s opinions; I've tried to assimilate information here.
I wrote this thread on @JerryCap 's suggestion, so blame him for hacking your feed today. ;)
The trolls will be ignored like dog isht!
THE END
