| | Please click on the above link to view the disclosure document before reading this article. The contents may not be reproduced in any form without obtaining prior permission from the publisher. |
In my previous article, “Hot or Not? Ambanis on a dream run!” we discussed about Mukesh Ambani and Anil Ambani group companies’ stock performance. In this article let us analyze these stocks both from fundamental as well as technical perspective.
-
Mukesh Ambani
Anil Ambani
The combined wealth of the Ambani brothers works out to USD 78.6 billion, making them the richest Indian family and the second richest family in the world. While Mukesh Ambani’s assets are worth USD 53.9 billion, Anil Ambani’s companies are worth USD 24.7 billion. (Source: The New World’s 5 Richest Families by The India Street.)
The following table shows the stock market performance of the companies in the last 6 months and one year.
Mukesh Ambani group companies:
| Scrip | 6 month return | 1 year return |
| Reliance Industries | 67.31 | 117.76 |
| Reliance Petroleum | 130.46 | 173.83 |
| Reliance Industrial Infra | 484.97 | 435.31 |
Note: Indian Petrochemical Corporation Limited, a Mukesh Ambani group company has now been amalgamated with Reliance Industries Limited and its shareholders have been allotted 1 Reliance share for every 5 shares of IPCL held by them.
Anil Ambani group companies:
| Scrip | 6 month return | 1 year return |
| Reliance Communications | 62.05 | 104.00 |
| Reliance Energy | 190.51 | 227.49 |
| Reliance Capital | 145.09 | 213.46 |
| Reliance Nat’l Resources | 263.39 | 311.79 |
The minimum returns in either of the Ambani group companies is 62% by Reliance Communications in the last 6 months; The maximum return is 485% by Reliance Industrial Infrastructure Limited.
In my previous article, “5 Great Long Term India Stock Buys” we analyzed Reliance Petroleum and Limited and found it suitable for long term investment. In our “Stock of the Week” series, we analyzed Reliance Energy Limited and mentioned that long term investors need to look out for a monthly close above 818.40 with good volumes. It closed at 1206 last month. This month, it has touched a high of 1959. In another article, “Hot or Not? Ambanis on a dream run!” we discussed about Reliance Natural Resources Limited and Reliance Industrial Infrastructure Limited.
The daily chart of Reliance Industrial Infrastructure is shown below.
We can notice the “one sided” price movement in the above chart. After 4 consecutive 10% upper freeze sessions, the stock hit 19 successive 5% upper freeze sessions. This may be considered “over manipulation”.
RNRL closed at 52 on September 19. After 4 trading sessions, it closed at 95.30 on September 25, gaining 83.3%. Such sharp rise was definitely an unexpected one, though technically the stock had broken out in third week of July.
If we exclude these two companies, it can be seen that Reliance Industries has performed marginally better compared to Reliance Communications; Reliance Energy and Reliance Capital have performed better than Reliance Petroleum.
Ranking based on financial ratios:
The following table shows the market capitalization of the companies.
| Scrip | M-Cap Rs. crores | Scrip | M-Cap Rs. crores |
| RELIANCE | 360,779 | RCOM | 154,406 |
| RPL | 82,575 | RELCAPITAL | 43,796 |
| RIIL | 3,950 | REL | 36,043 |
| | | RNRL | 15,792 |
| Total | 447,304 | Total | 250,037 |
Mukesh Ambani group companies’ market capitalization is much higher (more than Rs.197,000 crores).
The following tables list the P/E and P/BV ratios:
| Scrip | P/E | P/BV |
| Reliance Industries | 31.02 | 5.88 |
| Reliance Petroleum | - | - |
| Reliance Industrial Infra | 206.65 | 34.20 |
Note: According to Reliance Petroleum media release, the company has achieved over 70% overall progress in implementation of its large and complex refinery, coming up in a Special Economic Zone at Jamnagar. Based on the progress made till date, in the engineering, procurement and construction activities, RPL expects to complete the project ahead of December 2008. So P/E and P/BV ratios are not available.
| Scrip | P/E | P/BV |
| Reliance Communications | 54.96 | 7.52 |
| Reliance Capital | 50.85 | 8.42 |
| Reliance Energy | 42.36 | 4.17 |
| Reliance Nat’l Resources | 359.26 | 11.45 |
Due to the sharp price rise in RIIL and RNRL the P/E and P/BV ratios are high.
A P/E ratio of 10 to 17 is considered “fair” for many companies. If the P/E is between 17 and 25, the stock may be considered “growth” stock and the market may expect that the earnings are likely to increase substantially in future. However, for those stocks with a P/E of more than 25, it could be a case of “stock market bubble” i.e. overvaluation. This may be attributed to large amounts of money flowing into the market during a certain period of time.
The following table shows the P/E ratios of some of the ‘blue chip’ companies.
| Scrip | M-Cap | P/E |
| ONGC | 236,966 | 14.97 |
| Infosys Tech. | 105,360 | 26.30 |
| ICICI Bank | 122,049 | 37.37 |
| Bharti Airtel | 187,171 | 40.41 |
| Larsen & Toubro | 97,585 | 60.09 |
Reliance Industries has diversified businesses in polymers, petrochemical, refining etc. So it is difficult to compare this company with another company. Going by P/E ratios, we find that it is somewhat ‘cheaper’ compared Larsen & Toubro.
Reliance Communications has a much higher P/E compared to Bharti Airtel. IL & FS Investmart, which is an asset management company, has a P/E of 40.20, Cholamandalam DBS has a P/E of 15.17. These companies could be considered ‘cheaper’ than Reliance Capital. Tata Power has a lower P/E of 30.66 compared to Reliance Energy’s 42.36.
While Reliance Industries can be considered a ‘value’ stock (even at the current price levels), Reliance Communications, Reliance Energy and Reliance Capital may be considered ‘growth’ stocks.
Conclusion:
Based on the performance in last one year and at current valuations, Anil Ambani group stocks can be considered better valued in the stock market.
Sundaramurthy Vadivelu
| Suggested Reading |
| |
1 comments:
Tremors in Mukesh Camp: Reliance Power saboteurs named
With the news that those trying to sabotage the Reliance Power IPO have been named in a complaint to SEBI, the 'Chamchas' in the Mukesh Ambani camp are bound top get scared.
In fact, sources at Maker-IV were to believe, those aiding and abetting the anti-Anil venomous campaign were having a crisis session and trying come out with a cover up.
With the media noticing the all-out sinister campaign unleashed by the Mukesh camp on the younger Ambani – the outspoken Anil – some of those "helpful media friends" seems to have developed cold feet.
Information available on the Net shows that ADA Group has filed a formal complaint with market regulator SEBI to probe a ''disinformation campaign'' launched by some ''vested interests'' against Reliance Power's planned IPO. The public issue is estimated to raise about Rs 12,000 crore.
''The suspects behind the disinformation campaign have been named in the complaint filed with Sebi,'' the official said in a statement. The spokesperson, however, did not divulge names of the suspects, who the group has named in the complaint lodged with Sebi.
=========
Why is Big Bro scared of 'lil' Ambani?
Dalal Street is rife with open discussions today on the raging Ambani war. The most discussed topic is: Why is Big Brother Mukesh is so scared of the younger Anil?
Right from the day one of Anil Ambani declaring his intention to go public with his Reliance Power to raise Rs 12,000 crores, the Mukesh camp is literally burning the mid-night oil (they have lot of gas and oil, don't they) to flood the web and blog sites with anti-Anil stories.
One may well dismiss it as another Mahabharat or Kahani Ghar Ghar ki. But it is not as simple as that. There much more than what meets the eye in this corporate war.
Look at the systematic campaign launched against Anil: first the rival camp used obscure web sites like merinews.com . Then they planted some forged letters supposedly written by some MPs to the government complaining against so-called irregularities in the Reliance Power IPO process. Now, some of the MPs disclaimed their signature to these letters and the Mukesh camp has stooped to the level of using a judge's name in their 'Operation Mudslinging'.
The questions that arise are: Why is the Maker-IV camp so desperate against Reliance Centre? Is it just the market cap war? Is it another attempt towards one-upmanship? Or are they fuelling the campaign to settle scores on the gas supply issue?
Those who have been Reliance observers for well over three decades (including many media professionals) say that Mukesh is known to a soft spoken, result-oriented man. In fact the aggressive nature with which he personally supervised the building of the Jamnagar plant or the swift handling of crisis at Patalganga in the wake of the worst-ever floods in Konkan have earned him kudos.
If Mukesh was the solid rock behind the Reliance Parivar, it was Anil who was the public face. But everything has changed – for the worse – with Anil raising questions of corporate governance and principles.
Envy has changed everything and those hit by Anil's complaints have taken control of affairs at Maker-IV. The result: Mukesh is now playing into the hands of his 'trusted lieutenants?
Now that we hear Anil's camp has even named those who are behind the dirty cyber tricks, will those at the helm at Maker-IV have quick second thoughts on the mudslinging?
It's like an enemy camp retracting after their guns back fire!
Post a Comment