Saudi Aramco
Maybe you haven't heard the name of this company before
If you haven't heard of them, I will tell you some very interesting things about them today
This is a company, which is the biggest in the world
And in the oil sector,
It is a company, in the oil sector, which supplies 10% of the total crude oil to this sector
You must have heard this new a few days ago
That in the coming time, this company is going to launch its IPO
And this IPO
Will become one of the biggest IPO's in the world
I, Jagdeep Singh, welcome you to the Groww channel
Today we are going to discuss about Saudi aramco
And we will talk about Saudi aramco, which in the recent past
Has shown a lot of interest in India
And is going to buy a really big stake in a really big company in India
The first time Saudi aramco came in the news was in 2017
When the news first came that Saudi aramco is going to launch its IPO
And at that time, Saudi aramco's valuation came out be 2 trillion dollars
And they said that they will dilute 5% of their stake
For 100 billion dollars
Now you must be thinking that I told you at the beginning of this video that this company is going to launch its IPO
And now I told you that the company was going to launch its IPO in 2017
So why didn't the company launch its IPO during that time
And what was the reason because of which they have to defer their IPO launch
So, if you don't know about the process of IPO, I will tell you a little about it
When a company thinks of taking money from the people, they launch their IPO
And while launching their IPO, they call investment bankers
And they tell them their company's valuation
And because of the valuation they will sell a certain percentage stake of the company
And they should get a certain amount of money
And after the the investment bankers
Launch that IPO
So the same thing happened in the case of Saudi aramco
But Saudi aramco said that their valuation should be
2 trillion dollars
But the investment bankers said that they won't get that much valuation in the market
Because of which
Saudi aramco had to defer their IPO
Now, you must be thinking that Saudi aramco asked for 2 trillion dollars but the investment bankers did not give that amount
There must be some reason behind that
Because Saudi aramco's entire business revolves around oil
And if I talk about 2017, then at one time, the oil prices had gone down
Because of which there was a direct effect on Saudi aramco
And because of that their valuation had become less
And there was an effect on their IPO
And they had to defer their IPO launch
Everything I spoke about till now was their first IPO
That what the valuation of their first IPO and why wasn't it launched
But why are they launching their IPO now
And you must be interested in knowing what their valuation is now
If I talk about their current valuation so that is between 1.6-1.7 trillion dollars
And they have said that they are going to dilute only 1.7% stake
Because of which they will get an amount of around 25 billion
Now you must be thinking what the urgency for Saudi aramco was, that the IPO that they deferred
Because of the valuation
Now on an average, they are launching their IPO on the same valuation
Whenever a company launches their IPO, their shares start trading in the market
And whenever a share enters the market, their price goes up and down
Depending upon the price the market gives them
And Saudi aramco wants their share to enter the market
And for people to trade on it
And after this, their valuation will increase
They want to prove their worth by entering the market
Apart from this, Saudi Arabia is a country completely dependent on oil
And for a long time, it had been trying to diversify itself in different things
Because of which, the money
From aramco's
IPO, they are going to use it in different businesses
They are going to try to diversify themselves
So, that, from an oil dependent country
From an oil dependent company
It can diversify itself in different sectors
Now let us talk about Saudi aramco's net profit
How much profit do they make in one year
If I talk about the financial year 2018, then their net profit was 118 billion
If I talk about the half yearly profit in 2019
So, their half yearly profit was 47 billion
So you can imagine how much their net profit amount has increased
Now you must be thinking that apart from Saudi aramco there must be a lot of companies in the world
Whose profit is very high in one year
I will show you the list
About which company makes how much profit in one year
As you can see on my screen, if I talk about most profitable companies in the world in 2018,
The first name is of Saudi aramco
Saudi aramco's net profit in 2018 was 111 billion
After this comes Apple
Whose net profit was 59 billion
If I talk about the difference between the first and second company, there is a 50% difference
Which is a very big difference
Now you must be thinking what are the companies apart from Saudi aramco, whose market capitalisation is very high
If I talk about those two companies, then the company that comes after Saudi aramco is Apple
If I talk about Apple's market cap then it is 1.04 trillion
And after this is Microsoft
Whose market cap is 1.02 trillion
So you can imagine that the two biggest companies in the world
Are much below Saudi aramco
Only time will tell how Saudi aramco will perform when it trades in exchange
Let us talk about the question that I brought up in the beginning
That Saudi aramco is showing great interest in an Indian company
And they have said that in the coming time, they have thought of buying a 20-25% stake in the company
So the name of that company is Reliance industries
And Saudi aramco has said that they will buy a 20-25% stake of that company
In the coming time
Mainly from their refining and petrochemical business
And Reliance will use that money to reduce their debt
Because Reliance has said that in 2020
They want to become a debt free company
Now, friends, I will end this video with a question for you
What do you think the difference on Reliance's share will be because of this deal?
And apart from this
Out of all the companies in the world, which is your favourite?
Let us know in the comments below
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Happy investing!