3 Years of Dhirubhai’s Divided Empire

If an investor had bought 100 RIL shares for Rs 63,040 on June 20, 2005, its value would have gone up to Rs 2,32,920 now. Dividend in the last three years and bonus shares of RCOM would have added to the kitty. RCOM, which made to the top ten in market cap ranking in less then two years, is now the eighth most valuable listed company.

“The split itself was a bonanza for Reliance shareholders. RIL shareholders were allotted bonus shares in all the companies given to the Anil Ambani group as part of the settlement. As an original RIL shareholder, I got free shares in telecom, power, financial services and fuel management companies of Anil. All of them have appreciated,” said Pawan Dharnidharka, a long-time Reliance investor and a BSE dealer.

Take for example, Anil-owned Reliance Capital, which also controls Reliance mutual fund and insurance ventures. Its share price zoomed by 297 per cent from a mere Rs 294.20 to Rs 1,166.55 in the last three years. Reliance Energy jumped from Rs 658.25 to Rs 1,104.65 in the same period. In fact, the rise in most Reliance companies — except companies such as RCOM which were listed later — was faster than the Sensex which rose 124 per cent from around 7,000 points three years ago.

“There has been a major unlocking of value post the demerger. The brothers have been racing against each other and in the process creating value for shareholders. Both have been very aggressive and the economic cycle has also helped them a great deal. They have shown great vision… look at the Reliance stock prices. Some of them have increased about four times in three years,” says Harjit Singh Sethi of Almondz Securities.

According to an analyst, the Anil group’s IPO for Reliance Power at Rs 450 per share proved to be small disappointment for investors. The company later issued a bonus of three for five to compensate the investors for the fall in prices after listing. Notwithstanding this, it was a period of bonanza for Reliance investors in the last three years.