Stock in Action - Reliance 29 August 2024

 Stock in Action - Reliance

Highlights

1. The Reliance Disney merger will reshape Indian entertainment industry by combining extensive resources.

2. The Indian media landscape is significantly altered by this merger, creating a dominant player in television & streaming.

3. The Competition Commission of India approval marks a crucial milestone in completing this massive merger.

4. The Viacom18 & Star India merger brings together some of most popular TV channels & streaming platforms.

5. Reliance Industries' media strategy is clearly focused on dominating entertainment sector.

6. The impact of media mergers in India is profound, consolidating power in hands of fewer entities.

7. Nita Ambani's media leadership will guide new venture toward strategic growth in media space.

8. Disney content library integration into new entity offers a vast array of entertainment options.

9. Indian entertainment industry consolidation is exemplified by this merger, aimed at staying competitive.

10. Reliance investment in media sector underscores its commitment to expanding influence in industry.

Why Reliance Shares Are in News?

Reliance Industries Limited (RIL) has been making headlines recently due to its significant merger with Walt Disney Co.'s Indian media assets. Competition Commission of India (CCI) approved this landmark deal on August 28, 2024, which is valued at over ₹70,000 crore ($8.5 billion). merger will create India's largest entertainment company, combining Reliance's Viacom18 & Digital18 with Disney's Star India & Star Television Productions. This strategic move is expected to reshape media landscape in India, with Reliance owning a majority stake in merged entity, while Disney retains a substantial share.

What's Reliance's Recently Approved Deal?

The CCI's approval has paved way for merger between Reliance Industries, Viacom18, Digital18, & Disney's Star India & Star Television Productions. combined entity will become a media powerhouse with 120 TV channels & two streaming services, catering to a vast audience across India. Under terms of deal, Reliance will hold a 63.16% stake, while Disney will own remaining 36.84%. This merger will also see integration of Disney's extensive content library with Reliance's distribution network, offering a formidable challenge to competitors like Sony & Netflix in Indian market. Reliance Stock is gaining attention due to the massive merger with Disney’s Indian media assets.

What Will Be Impact of Deal?

The merger is poised to have a profound impact on Indian media & entertainment industry. new entity will dominate television & digital streaming space, with a significant share of cricket broadcasting rights & extensive content offerings. Advertisers may find it challenging to bypass this new giant, given its control over popular TV channels & streaming services. Additionally, Reliance's investment of ₹11,500 crore into joint venture will give company financial muscle to expand its operations & compete aggressively with other media giants. Reliance share is expected to benefit significantly from the creation of India’s largest media empire.

Why Has This Deal Happened?

The merger between Reliance & Disney is a strategic response to growing competition in media & entertainment industry. With rapid rise of digital streaming platforms & increasing importance of sports broadcasting rights, both companies recognized need to consolidate their assets to stay ahead of curve. For Reliance, this deal provides an opportunity to strengthen its presence in media sector, leveraging Disney's rich content library & brand reputation. For Disney, partnering with Reliance allows it to tap into India's vast & diverse audience while mitigating risks associated with operating independently in a highly competitive market. 3. Reliance Share Price may see upward momentum as the merger strengthens its media presence.

Post-Deal Outlook for Reliance

Following merger, Reliance is expected to emerge as a dominant player in Indian media industry. company's control over 120 TV channels & two major streaming platforms will enable it to capture a larger share of advertising market. Moreover, integration of Disney's content with Reliance's distribution capabilities will enhance company's ability to attract & retain viewers across different demographics. With Nita Ambani at helm of merged entity & Uday Shankar serving as vice chairperson, Reliance is well-positioned to steer company towards sustained growth & profitability in media sector. Reliance Stock Price could be influenced by the successful integration of Disney’s content library and channels. Reliance Stock Price could be influenced by the successful integration of Disney’s content library and channels.

Reliance July 24 Conference Call Highlights 

1. EBITDA at ₹ 42,748 crore, up 2% YoY.

2. Growth in consumer business & strong upstream offset weak O2C.

3. Retail saw growth led by grocery & consumer electronics.

4. Digital services benefitted from healthy subscriber addition & increasing FTTH penetration.

5. Overall PAT at ₹ 2,549 crore, up close to 5% YoY.

6. Focus on margin improvement & operational metrics like footfall & registered customer base showed healthy growth.

Digital Services

1. Jio's consolidated revenues at ₹ 29,449 crore, up 12.8% YoY.

2. EBITDA at ₹ 14,638 crore.

3. Subscriber base ended at 489.7 million with a net addition of 8 million.

4. 5G subscriber base close to 130 million, making Jio largest outside of China.

5. ARPU at ₹ 181.7, steady QoQ.

6. Data traffic increased by 33% YoY.

7. Strong growth in 5G mobility & AirFiber services.

8. Launch of new services like JioSafe & JioTranslate.

Reliance Retail

1. Revenue growth of 8% YoY at ₹ 75,615 crore.

2. EBITDA growth at 10%, ₹ 5,664 crore.

3. EBITDA margin at 8.2%, up 30 basis points YoY.

4. Digital commerce & New Commerce contribution at 18% of total revenues.

5. Opened 331 new stores during quarter.

6. Digital stores showed steady growth.

7. Multiple new brand launches & expansions in various categories.

8. Strong performance in grocery, consumer electronics, & fashion & lifestyle segments.

Hydrocarbons - Exploration & Production:

1.    EBIDTA at ₹ 5,210 crore, up almost 30% YoY.

2.    Steady production from KG-D6 with gas production at 29 MMSCMD & oil & condensate at 22,000 barrels per day.

3.    CBM production up almost 10% QoQ & YoY.

4.    Expectation of normalized global oil demand at around a million barrels per day.

5.    Indian gas market showing robust demand, with LNG imports up by 30% in first quarter.

O2C Business

1.    EBITDA at ₹ 13,100 crore, lower by 14% YoY & 22% QoQ.

2.    Decline driven by lower gasoline cracks, polyethylene, & polypropylene margins.

3.    Ethane cracking capabilities & domestic demand helped offset some of decline.

4.    Global oil demand expected to normalize this year.

5.    Strong demand in India expected to support fuel markets.

6.    Challenges include geopolitical tensions & market volatility.

Overall Recognitions

1.    Company focusing on strengthening market leadership in long-term growth sectors.

2.    Continued focus on tech platforms, supply chain, & distribution to sustain growth momentum.

3.    Revised tariffs expected to impact financials positively in coming quarters.

4.    Balance sheet remains strong with lower net debt than previous quarter.

5.    Challenges include geopolitical tensions & market volatility, but company remains optimistic about future.

Future Outlook for Reliance

Looking ahead, Reliance's foray into media & entertainment industry is likely to pay off handsomely. company's strong financial backing, coupled with its extensive distribution network & access to high-quality content, will enable it to maintain a competitive edge in market. Additionally, Reliance's focus on expanding its regional language programming & sports broadcasting rights will further solidify its position as a market leader. As media landscape continues to evolve, Reliance is expected to play a pivotal role in shaping future of entertainment in India. company's strategic investments & partnerships will likely drive long-term value for its shareholders & enhance its standing as a global conglomerate.