Mukesh Ambani loses US$5b as oil sinks Reliance shares

[MUMBAI] Mukesh Ambani, Asia's richest man, lost as much as US$5 billion from his net worth as Reliance Industries' shares tumbled to the lowest price in more than three months following a drop in quarterly profit.

The stock of India's most-valuable company fell as much as 6.8 per cent in Mumbai on Monday as of 12.21 pm, slipping the most since May 12 and touching the lowest since July 20. The benchmark S&P BSE Sensex only declined as much as 0.7 per cent. The slide also shaved down Mr Ambani's wealth to about US$73 billion to mark his worst day since March, according to the Bloomberg Billionaires Index.

The refining-to-retail conglomerate reported a 15 per cent decline in quarterly profit to 95.7 billion rupees (S$1.75 billion) late on Friday, as the coronavirus pandemic hit fuel demand. Revenue fell 24 per cent to 1.16 trillion rupees.

Reliance's oil refining unit has suffered a plunge in demand for transportation fuels, with Covid-19 forcing people to stay home. The conglomerate is in the midst of a transformation led by Mr Ambani, 63, as he looks to turn the oil-and-petrochemicals giant into a technology and digital services company by bolstering its telecom and e-commerce businesses.

The slip in earnings backs Mr Ambani's strategy and highlights the increasing need for Reliance to reduce its dependence on the energy sector and boost businesses that seek to leverage India's billion-plus consumers.

Reliance's gross refining margin - or profit from refining a barrel of crude oil into fuels - fell to US$5.7 per barrel in the latest quarter compared with US$9.4 a year earlier, the company said. Meanwhile, the profit at its telecom business under Reliance Jio Infocomm nearly tripled over the same period.

Reliance shares have rallied about 29 per cent this year, while Sensex has slipped 4 per cent, as investors cheered Mr Ambani's fundraising spree that saw Reliance mop over US$25 billion by selling stakes in its digital and retail units. The jump also triggered one of the biggest wealth surges as Mr Ambani amassed US$19.1 billion in 2020 through Friday, becoming the world's sixth-richest person, according to the Bloomberg Billionaires Index.

"The stock is correcting a part of its sharp gains registered over the last few months," said Arun Kejriwal, founder at KRIS, an investment advisory firm in Mumbai. "Now, the market is booking its profits."

BLOOMBERG