Reliance Retail now bigger than ITC, HUL, DMart, Nestle, Britannia, Tata Consumer, and Godrej Consumer combined

With its growing footprint in both offline and online arenas, sustained improvement in margins, and the share of private labels growing steadily, analysts at ICICI Securities continue to build in strong growth in this segment over the next two-three years.

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Analysts at Motilal Oswal value Reliance Retail’s core business at 40x EV/EBITDA on FY26E and the connectivity business (it is the master distributor for Jio Services via 7,900+ small-format Jio Stores and 1 million plus retail partners) at 5x to arrive at their valuation of Rs 1,812.

"Reliance Retail’s value in RIL share comes to Rs 1,593 per share," the brokerage said, adding that the premium valuation multiples capture the opportunity for a rapid expansion in its retail business and the aggressive rollout of digital platforms.

Calculations by global brokerage firm JPMorgan had earlier pegged Reliance Retail’s enterprise value (EV) at $112 billion and implied equity value at $102 billion. UBS valued it at $110 billion, and Bernstein at $111 billion.

At $110 trillion, Reliance Retail will be the No. 1 in the market-cap sweepstakes, based on prices as of April 26.

A league of its own

None of the comparisons, be it listed consumer companies or DMart, capture the full dimensions of Reliance Retail’s business, though, say analysts. Consumer companies are strictly not comparable as they are pure manufacturers and by their very nature, these businesses are less capital-intensive and earn fat profits on the strength of their brands. Even the comparison with Avenue Supermart may be not entirely correct.

Reliance Retail operates in a diverse range of retail formats, including grocery and electronics stores, fashion outlets, and much more with a broader presence across various categories. Avenue Supermarts, on the other hand, primarily operates hypermarkets under the D-Mart brand, focusing on providing value-for-money products in a no-frills environment.

Besides, their business models are vastly different. D-Mart follows a cluster-based expansion approach meaning that it first establishes a distribution centre in a new locality and then builds stores around it before expanding into newer markets. It’s calibrated growth with frugality at the center.

On the other hand, Reliance Retail has grown exponentially through acquisitions, according to analysts. “Reliance Retail is penetrating deep into the smaller towns where most of the retailers haven’t entered which is why the company is being able to grow at this pace,” says Preeyam Tolia, Senior Research Analyst, FMCG, Axis Securities. At present, Reliance Retail has over 18,000 stores across the country, while D-Mart only has 300.

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In line with its strategy and ambition, while Reliance Retail has been able to achieve scale, D-mart has focused on profitability by staying focused on its cluster-based expansion and skillful supply-chain and inventory management.

At Reliance’s scale, there is really no comparable company. DMart and VMart serve as competition in the general merchandise category; Zudio, Trent, Shoppers Stop, H&M and Zara in the fashion and lifestyle segments; HUL, ITC, Nestle, and Tata in the FMCG space.

Amazon, and Flipkart compete in e-commerce while Swiggy Instamart, Blinkit and BigBasket do so in the quick commerce/e-grocery space. Reliance Jewels competes with Tanishq, and the recently launched beauty portal Tira contends with Nykaa.

A finger in every purse

At present, there isn’t a conglomerate structure that straddles value, mid and luxury retail across product categories akin to Reliance Retail. Its large scale allows it to drive significant efficiencies and build a sizable customer base, which provides irreplaceable advantages, according to Karan Taurani, Senior Vice President - Research Analyst at Elara Capital. “Replicating this scale is difficult for competitors,” he adds.

Besides, Reliance Retail has a strong presence in online and e-commerce, with a sizable share of revenues coming from these channels. It also has its own retail platforms. This positions the company well to become a retail aggregator, driving all offerings under one umbrella.

This is expected to fuel higher growth compared to brick-and-mortar-focused peers. While online businesses currently report losses, Reliance Retail continues to grow faster which will eventually drive its path to profitability.

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With a finger in every retail pie and being a platform company with its presence across multiple channels, Reliance Retail now not only dominates in terms of sales but also is a proxy for the entire consumer space in India.

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