New Delhi: According to brokerage Bernstein’s most recent analysis released on Wednesday, Reliance Industries’ retail division, Reliance Retail, is now worth almost twice as much as its oil-to-chemicals (O2C) division.
The firm estimates that its retail operation is worth $112 billion, nearly twice as much as its O2C sector, valued at $57 billion. The telecom division of the company, Jio Platforms, is valued at $77 billion by the research firm, while the renewable energy division is worth $17 billion.
The expansion of offline stores, JioMart and new commerce, collaborations with regional Kirana stores, projected margin improvement from scale, and the anticipated initial public offering (IPO) of Reliance Retail are some factors contributing to the retail industry’s expensive valuation.
The brokerage said: “Reliance has been unlocking value across segments. RIL bought out minority shareholders in Reliance Retail (RR) with a share buyback.” Additionally, it mentioned speculations that a new investor is anticipated to pay $100 billion for a 1% interest in RIL’s retail division. At a valuation of $57 billion, Reliance Retail Ventures (RRV) sold a 10.09% share to financial investors in 2020. The value of the retail division has nearly doubled since that time.
According to Bernstein, Reliance’s Ebitda, or earnings before interest, tax, depreciation, and amortisation, is expected to rise from Rs 1.5 trillion in FY23 to Rs 2.4 trillion in FY27. This is most certainly being fueled by new energy and the expansion of digital retail.
In terms of capacity expansion, Bernstein projects that RIL’s retail expenditure will reach Rs 18,900 crore by FY27, constituting approximately 19% of the conglomerate’s overall capital expenditure (capex). It expects this to moderate as store expansion slows down.
