The reconciliation between the estranged Ambani brothers was followed by the scrapping of the non-compete agreement allowing both the group companies to foray into newer industries (except that Mukesh-led companies should not venture into gas power plants till 2022), where either of the two Ambani bandhus already have their active presence.
The only apprehension in the mind of shareholders of Reliance Group companies would be as to why was this amicable solution not reached before the tussle in the court of law?
This would have certainly saved crores of investor’s money that went into litigation purposes and paying those fat cheques to the most-admired legal representatives of both the group companies.
Now, that the patch-up is in place, ADAG stocks have flared up smartly during the last 15-20 sessions on the bourses. Let’s compare the stock prices from the intra-day lows of May 21 to the closing levels as on June 16 for all the ADAG counters.
Reliance Capital has surged from lows of Rs.611 to Rs.758, a rally of 20%. In fact, Reliance Communications has rallied 40% from the trough levels of Rs.133 to a whooping Rs.187. Reliance Power had zoomed from Rs.138 to Rs.175 to register a gain of 27% from the lows. RNRL has spurted from Rs.44 to Rs.68, an up-tick of 55% from the depressed levels.
From the frenetic evidence of the sudden surge in stock prices of ADAG counters, it is clear enough that markets are factoring in an amicable outcome for the settlement of the gas price dispute between RNRL and RIL.
The market participants are sensing that both the brothers will co-operate with each other and may also pave the way for a collaborated growth journey in synergies with each other whosesoever possible. ADAG stocks such as Reliance Capital and Reliance Communications have provided negative returns to the investors since the market recovered post global recession.
More recently, the stock of Reliance Communications has gained on the back of news that the company is looking to spin off its tower business. The cash-starved telecom company is eyeing a strategic stake sale to global telecom majors which would top-up the company’s requirements for funding 3G expenses and infrastructure.
Also, the AGM of Reliance Industries is scheduled on Friday and expectations are galore that some positive announcement may come up on this occasion. Speculation is rife that younger sibling shall attend this meeting and, probably, Mukesh-led RIL will announce minority stake in a couple of ventures of the ADAG.
Will Ambani brothers bite the bullet?