Rajeev Mantri of Navam Capital presented his in-depth investment thesis on Reliance Industries (India NSE: RELIANCE) at Asian Investing Summit 2018.

Thesis summary:

Reliance Industries is India’s largest private sector company, with revenue of Rs 3,500+ billion ($54 billion) and a market capitalization of Rs 5,902 billion ($90 billion). Reliance is a sprawling conglomerate, with business units in oil refining and marketing, petrochemicals, oil and gas exploration, retail, digital technology and media. Reliance’s core businesses of oil refining and petrochemicals (generating 80+% of revenue and profit) have been robust performers and significant cash generators.

The company has used this capital to invest heavily in Jio, a new digital technology business. The market continues to view Jio as a telecom services provider and is, therefore, under-rating the embedded optionality to provide consumer digital services to India’s billion-plus population. From a standing start in September 2016, Jio has acquired 160+ million customers, achieving growth by expanding the addressable market of mobile data consumers through innovating offerings, as well as by taking share from incumbents. By providing mobile data access at rock-bottom prices, Jio has weakened incumbents and forced industry consolidation.

Reliance trades at 18x trailing earnings, with 3x net debt / EBITDA. The company is well-positioned to grow the Jio business by offering Jio’s large user base a mix of subscriptions and advertising as a digital consumer-centric business rather than an industrial oil and gas enterprise.

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About the instructor:

Rajeev Mantri is director of private investment firm GPSK Investment Group, and executive director of Navam Capital, an India-focused venture capital firm. Prior to founding Navam Capital, Rajeev worked as a venture capitalist at New York-based Lux Capital, focusing on investments in energy, water and nanomaterials. Rajeev has contributed columns and articles on technology, investing, venture capital and political economy to The Wall Street Journal, Mint, Financial Times, The New York Times, MIT Technology Review, BioSpectrum, Roubini Global Economics and others. In August 2010, Rajeev co-founded Vyome Biosciences, a biopharmaceuticals company, and served as Vyome’s president through the company’s formative years. Rajeev graduated with a BS in materials science and engineering from Northwestern University, and an MBA from Columbia Business School, specializing in private equity and value investing.