Mukesh Ambani, Asia’s richest man, lost a whopping of about $5 billion from his net worth as Reliance Industries Ltd’s shares dropped to its lowest price in more than three months following a huge drop in its quarterly profit. As a result, India’s most profitable company dropped by about 6.8% in Mumbai as of 12:21 pm on Monday which was noted as the lowest since July 20. The S&P and BSE Sensex was declined as much as 0.7% and the slide was cut down to about $73 billion of Ambani’s wealth which undoubtedly has been the worst day since March, reports according to the Bloomberg Billionaires Index.
Reliance’s oil refining unit suffered this huge plunge in demand for transportation fuels, amidst the Covid-19 pandemic which made people stay at home.
The refining – to – retail conglomerate reported a 15% decline in its quarterly profit t0 95.7 billion rupees ($1.3 billion) as of late Friday, due to the fuel demand that was hit by the coronavirus pandemic. Ultimately leading to the fall of revenue of about 24% to 1.16 trillion rupees.
Hence the conglomerate is in the midst of a transformation that was led by Ambani, 63, as he seems to turn the oil and petrochemicals giant into a technology and digital services company by bolstering its telecom and e-commerce business.
The huge drop in earnings backs Ambani’s strategy while it highlights the increasing need for Reliance Industries the reduction of its dependence on the energy sector also while it boosts business that can leverage India’s billion-plus customers.
Reliance’s gross refining margin or profit refining a barrel of crude oil into fuels fell as much as $5.7 per barrel according to the latest quarter compared with $9.4 a year earlier, as per the company’s sources. However, the telecom business under the name of Reliance Jio Infocom Ltd made a profit than tripled over the same period.
While the Sensex slipped 4%, Reliance shares rallied about 29% as the investors cheered Ambani’s fundraising spree that saw Reliance mop over $25 billion by selling stakes in its digital and retail units. This raise also triggered one of the biggest wealth surges as Ambani gathered $19 billion in 2020 through Friday, becoming the world’s sixth-richest person, according to the Bloomberg Billionaires Index.
“The stock is currently correcting a part of its crisp 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.”