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Vision and Discipline - A new story to watch


The Reliance Story


Reliance which has recently become a D-Street darling, soaring more than 100% after its fall in March, has one aspect that is spoken at length and another equally important aspect that goes unnoticed in public discourse.


The aspect that gets spoken about ofcourse is vision. Private Equity Funds and Tech giants across the globe seem to have bought into Mr Ambani's vision of harnessing the power of data of billions of Indians - empowering every one from the small businessman to the rural kid with a cheap smartphone as he does it.


We were ofcourse fans and owners much before the stock became a mainstream sweetheart - taking about the business at length in our piece dating back late last year. [ You could read our two most popular pieces on the topic - A deepdive into JioMart, and a discussion of firms that had successfully used their cashcows to birth stars ]


An aspect that goes relatively undercovered however is the firm's discipline - discipline is a focussed attempt to reduce debt (well ahead of target), providing for not only a significantly derisked firm, but also a good environment to get in top investors and position the firm for critical IPOs.


While vision is key to drive the bulls on D-Street, discipline is equally important to keep the long term investors satisfied about your ability to consistently deliver on that vision.


The Tata Story


Well, Mr Ambhani seems to have motivated another conglomerate on a similar path. The Tatas. While the firm has had a few missteps along the journey, they now look poised to realign and focus on the path ahead.


They start on the discipline front with an attempt to delever Tata Motors, bringing debt to zero over the next three years. With more than 60000cr of debt on their books, this is not going to be an easy task. The market rewarded the announcement by a 6% upmove on Tuesday, driven in part by the potential derisking post delevering, but more importantly by the cost cutting and discipline displayed.


Earlier this week, the group announced the Tata Super app. The group aims to take the likes of Amazon and Reliance head on with the super app that would offer a range of services ranging from grocery delivery to payments. In a country where niche apps have triumphed over Super Apps ,and the group has no core app to draw people towards (Paytm for eg has Payments) or a distribution channel to get the initial customers (Reliance has Jio) , the Tatas wouldn't be the first company you'd bet on to build India's super app. And yet that is what they are targetting.


We would ofcourse need a lot more colour and evidence before we buy into the vision and give them credit for the discipline, but it is a positive nonetheless to see a behemoth try and bring new life into its business.


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