Business Standard

Bernstein pegs Reliance Industries' stake in retail arm at $111 billion

Says firm best positioned in the 'largest and fastest growing e-com market'

Reliance Industries, RIL

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Dev Chatterjee Mumbai

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Global investment management firm Bernstein has pegged the enterprise valuation of Reliance Industries (RIL)’s 85 per cent stake in Reliance Retail at $111 billion, while valuing the Mukesh Ambani-led company’s 66.5 per cent stake in telecom and digital platform arm Reliance Jio at $88 billion.

Reliance Industries had earlier planned to list both its subsidiaries to unlock value for its shareholders but hadn’t fixed any timeline.

The report said that Reliance Retail had raised $6 billion by diluting a 10.1 per cent stake, while Jio Platforms raised $20 billion from investors by selling 33 per cent in 2020. Most of the investors in Reliance Retail, except Singapore-based sovereign wealth fund GIC, had also invested in Jio Platforms.

Expecting a sharp rise in India’s economic growth story, the report said that since 2015, RIL had built a sprawling retail business with Reliance Retail setting up 18,000 store nationwide, with a gross merchandise value (GMV) of $30 billion; a dominant 4G network in the form of Reliance Jio, which has 430 million subscribers; and a strong digital media platform that now offers OTT, IPL, music streaming, and news through strategic acquisitions. “This makes RIL the only Indian player to have an integrated (offline/ online) offering, and the ability to compete with global tech giants (Amazon, Walmart).

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All the global giants are present in the Indian market, either through organic set-ups (Amazon, Google, Facebook, Netflix and Apple) or investments/acquisitions (Walmart). They have been successful in digital advertising (Google and Facebook) ,” it said.

However, the report said that the largest opportunity lied in e-commerce and entertainment where winners would be determined by the most compelling integrated-value proposition. Currently, only Reliance (Jio/ Reliance Retail) and Amazon have such a platform and stand to benefit, the report said. 

On the rise of e-commerce, the report said India was one of the few large and under-penetrated e-commerce markets expected to reach $150 billion in GMV by 2025, with online penetration doubling in the next 5 years. Flipkart ($23 billion GMV) and Amazon ($18-20 billon GMV) lead with over 60 per cent market share.  Reliance is number three ($5.7 billion e-com sales), driven by “attractive” categories of fashion (Ajio) and JioMart (e-grocery).

E-tailer Meesho’s GMV has been estimated at $5 billion. All three players, the report said, are focused on scale, customer loyalty, and profitability.

“We believe Reliance Retail/Jio is the best positioned player in the largest and fastest growing e-commerce market. The advantages of its retail network, mobile network, digital ecosystem, and “home-field advantage” in a famously complex regulatory and operating environment mean [that] in the long term, it will likely claim the lion’s share ofthe $150-billion e-commerce marketplace,” the report said. 
RIL’s fibre assets InvIT valued at Rs 2.08 trillion
 
The infrastructure investment trust (InvIT) holding Reliance Jio’s fibre optic assets has an enterprise value of Rs 2.08 trillion, according to accountancy and business advisory firm BDO. Digital Fibre Infrastructure Trust holds 51 per cent in the fibre company and the remaining is held by Reliance Industries (RIL) and minority shareholders, the trust had said in a statement to the exchanges. RIL had transferred telecom towers and fibre optic infrastructure to InVITs to reduce debt. 

Dev Chatterjee

Ajio enters value segment with goods from Rs 99 

Ajio has launched its fashion and lifestyle website Ajio Street targeting value segment with hyperlocal brands. The offerings on its website start from Rs 99. The app currently reflects only Ajio and Ajio Luxe and is yet to offer Ajio Street on its app. An email sent to Reliance Retail did not elicit any response till the time of going to press. This brings Reliance in direct competition with Trent’s 
Zudio and Max from Lifestyle International, which also cater to the value segment.  

Sharleen D'Souza

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First Published: May 25 2023 | 7:16 PM IST

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