Is the new Amazon amongst us?

The US has Amazon, China has Tencent and India, maybe Reliance Industries. Those of you following my blog have not seen me talk about it much but I truly believe Reliance is going to surprise all of us in this decade and beyond.

Here’s a company which recently bought a five star hotel in Manhattan, a golf resort in London a few weeks back and has been busy buying a quick delivery app along with Sodium battery startups and a bankrupt solar company, all in the past few months. This sounds a bit haphazard to most of us, more like a billionaire buying toys for his kids but it does make sense, a lot of it.

Let’s rewind a decade to 2012. Amazon was yet to launch its India operations, prime day, Echo & Alexa or even Prime music n video. It didn’t even tell folks that it was a hugely profitable warehouse running the biggest cloud computing network this world has ever seen or will ever see. It was worth about $150B thereabouts. In the next five years, it did everything I mentioned above, produced Emmy winning movies and is numero Uno in India, way ahead of Flipkart ( I don’t even know if anyone still busy from there).

It’s selling groceries, books, iphones and everything else you need, along with movies and music and payments. All that because it had money flowing in from its warehouse , the AWS. No matter what happened to its retail or how much money it loses in payments, it still will churn cash quarter after quarter on the back of its cloud database facilities, the Amazon Web services.

For what Tencent has been doing in China and beyond, you’ve to watch some recent videos of Mohanish Pabrai which are sure to blow your mind off. https://youtu.be/-vF_nZ526y0 this is one of them.

Coming back to Reliance. It’s trading at about$220 B market cap with almost $8B profits. What it doesn’t tell you is that on the back of a hugely profitable oil to chemical business, it has become the indisputable leader in Indian telecom but hey, you already know it. What else am I telling you here?

My version is that Jio isn’t where the juice is. Jio was just a means to achieve the end which is to capture an ever growing Indian household who has more money to buy stuff, as it grows richer. Since Jio is here, people can now go online and shop. This is the level 1 when one in three Indians pay monthly rent to Reliance in form of recharges. The second layer is Jio Fibre when it’s making people addicted to its services because at 1000rs, it’s unbelievable the kind of things you get. You don’t pay Amazon for prime, you pay Jio for Amazon prime and get a hell lot others for free.

However, this is all peanuts when you realise Reliance is selling everything from milk at Reliance Fresh to luxury clothes in partnership with Armani Exchange and Hamleys toys to Zivame to now jewels. If you combine everything and take a holistic view, a company who’s deploying cash to make sure a customer ends up buying one or the other things from one of its subsidiaries, you realise you’ve an Indian Amazon in the making.

My simple bet is in three to five year’s time , most urban Indian households would be paying about 5000pm to Reliance, in one or the other form and that makes it a bigger story than a lot of Dmarts and Asian Paints put together. This is not expensive at $220B. It is a steal here for if nothing unforseen happens, this is going to be the first Indian company to cross $1 Trillion in market cap. That’s still a 5x from here.

PS: I learnt this lesson the hard way as I had Reliance way back in 2018 at now adjusted Rs 800 per share. In my over enthusiasm for Graham’s methods, I sold it at about 1100. Then came Covid and the Jio platforms deals which changed everything.