INDIA FILE-An early Diwali for Ambani
By Ira Dugal
Oct 27 (Reuters) - A blockbuster IPO and a visit from US Secretary of State Marco Rubio gave Mukesh Ambani plenty to celebrate last week as the peak of the Indian festive season approaches.
The only dark spot for the billionaire in an otherwise bright week was a public battle with Elon Musk. All things Ambani is our focus in this edition of the India File.
What would you like to read more about in the India File or what changes would you like to see? Write to me at ira.dugal@thomsonreuters.com.
THIS WEEK IN ASIA
** Global food inflation is expected to intensify as supply shocks pile up
** As Japan pursues a chip-industry reboot, it's being pressed to build America's
** AI isn’t Asia’s only game in town
** China's lab-grown diamond makers target AI, chip sectors for next wave of growth
THE STARS ALIGN
In Mumbai's business circles, the biggest decisions — from product launches to marriages — are often timed to the Indian astrological calendar.
The initial public offering of Mukesh Ambani’s Reliance Jio Platforms seemed to follow the tradition, opening during what is generally considered an auspicious period just ahead of Diwali, one of India’s biggest festivals, which falls on November 8 this year.
Whether it was in the stars or simply down to business fundamentals, the IPO was a runaway hit.
The Jio public offering — the first from Mukesh Ambani's group in 20 years — was the most subscribed public offering in Indian history, drawing $77 billion in bids, my colleague Aditya Kalra reported.
The $3.2 billion IPO closed with subscriptions at over 22 times the total shares on offer, with institutional investors bidding for over 70 times the shares on offer for them. Abu Dhabi Investment Authority, BlackRock and Fidelity were among the big names to invest in Jio's IPO.
Read here for the country's top IPOs.
The strong subscriptions could mean that shares in Jio may rally when they list on October 28.
The informal grey market, where unlisted securities trade, is signaling a 22% gain on listing compared to the issue price of 1,119 rupees ($11.76) per share.
"Jio offers a combination of market leadership, healthy earnings growth and future opportunities in broadband, enterprise technology and AI," said Mumbai-based brokerage Motilal Oswal in an October 19 report, putting a 'subscribe' call on the public offering both for listing gains and long-term investment.
At a valuation of 15 times enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/EBITDA), Jio is valued at a premium to industry peers, brokerage Geojit Investments said in an October 21 report.
While this premium valuation may limit near-term upside for the stock, monetisation of new businesses, including cloud and AI services, could emerge as a key driver of earnings growth over the medium to long term, Geojit said, also putting a 'subscribe' rating on the issue.
Catch up on Jio's businesses in this factbox.
The public offering has thrust scion Akash Ambani into the spotlight. Akash has led the IPO discussions, with people telling Reuters reporter Vibhuti Sharma that he is increasingly involved in strategic decisions and investor conversations.
Read more on Akash Ambani in this Reuters Newsmaker.
AMBANI'S GEOPOLITICAL AXIS
For Mukesh Ambani, whose empire stretches from oil and chemicals to retail, telecoms and planned satellite services, the week brought attention well beyond the Jio IPO.
Rubio travelled to Jamnagar, home to Reliance Industries’ vast refining complex, saying he is encouraging the company to process more Venezuelan crude and discussing whether it could eventually produce oil in Venezuela.
Rubio described India as a refining "superpower".
The warmth from Washington, however, contrasted sharply with a very public attack from SpaceX SPCX.O boss Musk.
The billionaire accused the Indian government and Ambani of holding up Starlink’s entry into India, at one point asking whether Ambani was the "real boss" of the country and later referring to him as "Prime Minister Ambani".
The government rejected suggestions of bias, saying Starlink and satellite ventures backed by Jio and Bharti Airtel BRTI.NS were at broadly the same stage of the approval process.
Reliance eventually broke its silence, saying it had "never feared competition" and welcomed Starlink, adding that Jio's own satellite service was also awaiting clearance.
Musk eventually struck a more conciliatory note, replying to Reliance’s statement with "Much appreciated."
MARKET MATTERS
India's imports of Middle Eastern crude in September returned to levels seen before the Iran war, reported Nidhi Verma of Reuters. In contrast, Russian oil imports fell, with people in the industry expecting such supplies to remain subdued in coming months.
Read here for more insights into the data.
THIS WEEK'S MUST-READS
Top stories across the Reuters India file over the past week spanned spirits firms, drugmakers, the ongoing battle over control of the Tata group and Yes Bank's YESB.NS plans to deal with a court ruling reversing the write-off of over $800 million in AT1 bonds.
India probing Pernod, Diageo Scotch imports under India-UK trade pact, Aditya Kalra reported.
Tata's owners deserve to prevail in power struggle, Breakingviews' Una Galani wrote.
Dr Reddy's rolls out new generic Ozempic brands, Rishika Sadam reported.
Yes Bank unlikely to pay AT1 bond coupons despite bondholders' demand, Gopika Gopakumar and Jayshree P. Upadhyay reported.
($1 = 95.1850 Indian rupees)