The Mukesh and Anil Ambani Portfolios

Billionaire Ambani brothers’ family portfolio in Reliance

The India Street Analysis

The India Street published Rakesh Jhunjhunwala’s portfolio few months ago. Mukesh Ambani was reported to be the world’s richest person by Indian media. But it was denied immediately by Reliance.

While there are many figures floating around media about their net worth, The India Street attempts to look from a different angle: their family shareholding in Reliance.

Mukesh is married to Nita and they have three children, Akash, Isha and Anant. Anil is married to Tina and they have two sons, Jaianmol and Jaianshul.

We discussed about Mukesh Ambani and Anil Ambani group companies in my earlier article, “Mukesh Ambani vs Anil Ambani : Which Brother's Companies are the better Investment?” as well as “Hot or Not? Ambanis on a dream run!”

Let us analyze the Ambani families’ (including Kokila Ambani) stake in Reliance group companies. We will be discussing only the shareholding in the names of family members.

The data source for the tables given below is BSE, and it is as on September 30, 2007.

Mukesh Ambani group companies:

Reliance Industries Limited:

Name	Number of shares	% of total shares
Kokila Ambani	3665227	0.26
Mukesh Ambani	1807923	0.13
Nita Ambani	1699073	0.12
Akash Ambani	1681595	0.12
Isha Ambani	1682195	0.12
Anant Ambani	50000	0.00

If we add all the shareholding, it amounts to only 0.75% of the total number of shares. At the current market price of Rs.2713 the market value of the family’s holding works out to Rs.2872 crores.

Mukesh Ambani family does not have a single share on their name in Reliance Petroleum Limited and Reliance Industrial Infrastructure Limited. Interestingly, Anil Ambani controlled Reliance Capital has 1.06% stake in RIIL.

Anil Ambani group companies:

Reliance Energy Limited:

Name	Number of shares	% of total shares
Kokila Ambani	274891	0.12
Anil Ambani	139437	0.06
Tina Ambani	123812	0.05
Jaianmol Ambani	125231	0.05
Jaianshul Ambani	7	0

At the current market price of Rs.1852, the market value is around Rs.123 crores. But, their total shareholding percentage is just 0.28.

Reliance Natural Resources Limited:

Name	Number of shares	% of total shares
Kokila Ambani	3665227	0.25
Anil Ambani	1859171	0.13
Tina Ambani	1650832	0.11
Jaianmol Ambani	1669759	0.11
Jaianshul Ambani	100	0

In RNRL, Ambanis have slightly more shareholding at 0.60% and the market value is Rs.126 crores at the current price of Rs.142.

Reliance Communications Limited:

Name	Number of shares	% of total shares
Kokila Ambani	4665227	0.23
Anil Ambani	1859171	0.09
Tina Ambani	1650832	0.08
Jainmol Ambani	1669759	0.08
Jainshul Ambani	100	0

The current market price is Rs.787 and the market value is Rs.774 crores.

Reliance Capital Limited:

Name	Number of shares	% of total shares
Kokila Ambani	545126	0.22
Anil Ambani	273891	0.11
Tina Ambani	263474	0.11
Jaianmol Ambani	83487	0.03
Jaianshul Ambani	5	0

At Reliance Capital’s current price of Rs.1986 the market value works out to Rs.232 crores.

Total market value of Anil Ambani family portfolio is around Rs.1254 crores.

Conclusion:

Under the promotor and promotor group category, Reliance Industries Limited has 48 individuals/companies listed, for e.g. Petroleum Trust, Reliance Enterprises Limited etc. Similarly, the Anil Ambani group companies feature names like AAA Project Ventures Private Limited, Reliance Innoventures Private Limited, AAA Power Systems Global Private Limited, AAA Communication Private Limited, AAA Enterprises Private Limited etc. The Ambanis’ stake in these companies is not available.

Also, it is virtually impossible to know what other companies stocks they buy on their names. Obviously it is difficult to guess why they are not interested in increasing their personal stake in group companies.

Given this kind of a scenario, it is hard to estimate their actual share holding and the market value.

Mukesh Ambani vs Anil Ambani : Which Brother's Companies are the better Investment?

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.

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.

Hot or Not? Ambanis on a dream run!

The Ambanis: Anil, Dhirubhai and Mukesh

Dhirajlal Hirachand Ambani (28 December 1932 - 6 July 2002), was instrumental in bringing first time Indian investors to stock market. After working in Gulf as dispatch clerk, he returned to India to start Reliance Commercial Corporation with an investment of Rs.15,000. It was engaged in polyster yarn import.

He started a textile mill at Naroda, Ahmedabad to manufacture textiles using polyester fibre yarn. He implemented backward integration philosophy and a petrochemical complex at Patalganga in Maharashtra was set up to produce polyesters, intermediates and petrochemicals. Reliance established another petrochemical complex at Hazira near Surat in Gujarat to manufacture ethylene, propylene, ethylene glycols, polymers like polypropylene, polyvinyl chloride, polyester intermediates like pure terephthalic acid, polyester filament yarn etc.

His dream project, of course, was a grass root refinery. The 27 million metric ton grassroot refinery at Jamnagar, Gujarat came up in 1999. Reliance has diversified into power, telecom, infrastructure, capital markets, insurance, logistics, retail etc.

At the time of Dhirubhai’s demise, Reliance Group had a gross turnover of Rs. 75,000 crore. This was 1000 times its 1976 – 77 turnover of Rs.70 crore.

Reliance came out with their first IPO in 1977 and Dhirubhai convinced people in rural Gujarat that his company would yield substantial returns to shareholders. This happened at a time when the awareness among public about stock markets was minimum.

Have his sons, Mukesh and Anil, lived up to Dhirubhai’s repuations? The answer is a big YES, as can be seen from the tables below.

Mukesh Ambani Group Companies’ Performance:

Scrip	3 month return	1 year return	5 year return
IPCL	34	50	621
RELIANCE	38	104	822
RIIL	140	138	3,542
RPL	74	150	NA

Anil Ambani Group Companies’ Performance:

Scrip	3 month return	1 year return	5 year return
RCOM	17	72	NA
REL	85	137	396
RELCAPITAL	45	196	3,370
RNRL	167	307	NA

In the last 1 year, IPCL and RCOM have gained more than 50%; All other companies have gained more than 100%. In the last five years (After Dhirubhai’s demise) RELCAPITAL and RIIL have got multiplied by more than 30 times; REL, IPCL and RELIANCE have gained more than 4, 6 and 8 times respectively.

Dhirubhai is no more; but his dreams have become true. Those who had faith in him and his companies have been thoroughly rewarded.

Let us now analyze some of the medium term charts of these companies.

In late 2004, the media reported that there was some dispute among Ambani brothers regarding ownership of group companies. The Hindu Businessline dated November 30, 2004 read:

“THE Ambani controversy was today stoked further with the despatch of another e-mail to the employees of Reliance Industries Limited, this time by the Vice-Chairman, Mr Anil Ambani, obliquely emphasising the brothers' equal status in the corporate group.

… This is the third email to the employees from the Ambani brothers. The first one was from Mr Mukesh Ambani last week, telling his employees that the Chairman and Managing Director (who is himself) is the final authority at Reliance…”

What did this mean to the stock market? See the chart below.

The weekly chart of Reliance indicates that on November 5, 2004 the stock closed at 540.35. On June 10, 2005 it closed at 566.55.

Between November 5, 2004 and December 17. 2004, the Nifty gained 160 points whereas Reliance lost 59.80 rupees, indicating the market was not quite certain about the stock. Reliance is known to perform very much in line with both Sensex and Nifty due to its weightage. But during this period it was not so.

Finally, after the accord was reached between the brothers, the stock managed to break its resistance at 650 during the week ending June 24, 2005. Technically, a “three inside up” bullish candlestick pattern was formed during first week of June. There was a huge upward gap when the resistance was broken.

The Tribune reported on June 19, 2005 about the accord as follows:

“India’s biggest industrial conglomerate, Reliance Industries Limited, will finally be split up between Mukesh Ambani and his younger brother, Anil, thereby ending a seven-month war between the two.

Kokilaben Ambani, their mother and widow of Reliance Industries Limited founder Dhirubhai, announced the broad contours of the settlement in a statement released here today.”

All the companies mentioned above are currently trading at lifetime highs. There have been no reversal signals on any of the medium term charts. But it is better two book profits in RIIL and RNRL, since both have appreciated very sharply in the last one week or so.

Reliance Industrial Infrastructure Limited

(Group: B1, Scrip Code: 523445):

The stock formed a false “head and shoulder” pattern between January 2006 and March 2007. False, because, the neckline support was not broken; Volumes were increasing as right shoulder was formed. Between May and June 2006, stock had fallen from a high of 951.70 to a low of 357.40. A bullish three inside up candlestick pattern was formed during the week ending September 7, 2007. From a close of 498 it has appreciated to 1149 (131%) in just about 11 trading sessions. It is extremely overbought in daily charts as well. So profit booking may be considered in this counter.

Reliance Natural Resources Limited (Group: B1; Scrip Code: 532709):

This stock made a high of 41.65 in March 2006. It had broken this resistance during the week ending July 20, 2007. However, in the last six trading sessions the stock has already gained 84%. It is quite an unusual movement since no major price rise was observed for almost 2 months after the breakout. Profit booking may be considered in the stock for the medium term.

As mentioned earlier, we need to wait for a confirmation of trend reversal for these stocks. But short term investors may avoid these stocks due to overbought conditions and a reversal is expected anytime.