25 June, 2021

Big Trouble

In its pursuit of ever-higher growth, could the Ambani conglomerate have spread itself a little too thin?

Big Trouble
It was billed as the biggest merger in India's corporate history. It created a conglomerate that became the country's first private sector entity to find its way into the prestigious Fortune Global 500 list. But big is not necessarily better. At least that's what the capital markets thought about this merger between Reliance Industries (RIL) and its sister concern, Reliance Petroleum (RPL). Ever since the decision was announced this March, the bears thronged the ring hoping to make another killing on the exchange.

In the past seven and a half months, the RIL stock has plummeted by over 20 per cent. In fact, in a space of just five days (September 30-October 4), the scrip lost nearly 9 per cent in market capitalisation. The story was repeated in the case of RPL, which too shed over 8 per cent the same week. (Trading in the RPL scrip was stopped on October 10 as part of the merger process.) The biggest sellers included both domestic and foreign institutional investors. And several investment analysts kept airing more bad news saying the RIL scrip could go down further in the...

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