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| 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.
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 |
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| 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.