NEW DELHI: Several brokerages have pegged valuation of Reliance Retail at over $100 billion, making the oil-to-telecom conglomerate Reliance Industries Ltd’s (RIL) retail arm bigger than FMCG giants like HUL and ITC and financial majors like ICICI Bank and Axis Bank.
The valuation estimate comes as talks related to the listing of Reliance Retail have gathered momentum.
“Reliance Retail Ltd (RRL) announced that equity shares held by non-promoters in RRL would be extinguished (0.04% stake, implying potential outflow of only Rs 500 crore). Based on independent valuers’ valuation of RRL of Rs 850-900/share, implied valuation for RRL is Rs 825,000 crore or $100 bn,” said analysts at JM Financial in a note on Monday.
“Accordingly we estimate equity value for Reliance Retail Ventures Ltd (RRVL) at Rs 8,600bn or $105 bn, given RRVL’s EBITDA is 2-4% higher than that of RRL as it also has a few other investments/assets apart from its stake in RRL. This implied valuation is 5-10% higher than JMFe valuation of $90-100bn for the entire Retail business,” they added. RIL owns 85% of RRVL, which in turn owns over 99% of Reliance Retail.
Among global brokerages, JPMorgan has pegged Reliance Retail’s enterprise value at $112 billion while UBS has valued it at $110 billion. RIL had in 2020 sold a 10.52% stake in RRVL to a handful of private equity investors at a valuation of around Rs 4.2-4.3 lakh crore.
The $100 billion-plus valuation makes it the fourth most-valued firm on the BSE. Its market cap will be more than ICICI Bank (Rs 6.63 lakh crore), HUL (`6.25 lakh crore), ITC (Rs 5.80 lakh crore) and any Adani Group firm. Currently, Reliance Retail’s parent entity RIL is India’s largest company with a market cap of Rs 18.50 lakh crore while TCS is a distant second at Rs 12 lakh crore. The Mukesh Ambani-promoted company on Friday had announced that it will cancel shares held by non-promoters in RRL and pay shareholders Rs 1,362 per share, a premium of up to 60% from the current level.
Reliance share gains 4%, Ambani’s wealth zooms
Shares of Reliance Industries Limited (RIL) rallied up to 4.5% to hit a fresh 52-week high of Rs 2,755 on Monday as investors are queuing up to buy the stock following the announcement of the record date for the demerger of Jio Financial Services (JFSL). All the shareholders of RIL, as of the record date of July 20, will earn one share of Jio JFSL for every RIL share they own. Following this surge in RIL share prices, Mukesh Amabani’s personal wealth increased by $3.4 billion to $96.9 billion and the billionaire was in the 11th spot in the global rich list, as per the Forbes real-time billionaire index. The spinoff, which will create the fifth-largest financier in terms of capital and compete directly with the likes of Paytm and Bajaj Finance and will complement RIL’s consumer businesses.