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RIL AGM on June 24 | Goldman Sachs expects the retail business to be the next growth engine

The investment bank said there could be announcements related to telecom tariff hike and new product launches with Google, Facebook and Microsoft.

June 22, 2021 / 12:35 PM IST
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Global investment bank Goldman Sachs in a note highlighted that the next growth driver for Reliance Industries would be the retail business which grew 5x over FY16-20. The investment bank maintained buy recommendation on the stock with a target of Rs 2,425.

With the outbreak of COVID-19, the retail business has taken a hit, but the oil-to-telecom conglomerate focused on building strong digital capability which would come in handy to scale up retail operations.

“We believe the retail business (including e-commerce) is set to be the next growth engine for RIL, with potential for retail EBITDA to grow 10x over the next 10 years. During the macro downturn, RIL has focused on building strong digital capabilities and we believe the scale-up in omni-channel offering is driving sizeable market share wins,” said the note.

Goldman Sachs sees a six-fold increase in grocery organized retail penetration in India by FY30, coupled with c.15% market share gain for RIL.


RIL's core retail revenue is expected to grow at a 36% CAGR over the next four years to $44 billion and e-commerce revenues likely to be 35% of total retail revenues in FY25, at $15 billion, highlighted the note.

Organised grocery retail - revenue market share

RIL Goldman Sachs

Reliance Industries share price has rallied by over 13 percent so far in 2021, and over 29 percent in the last 1 year – underperforming the Nifty50 which rose over 50 percent in 1-year period.

The stock hit a record high of Rs 2,368 on the BSE on September 16, 2020, and since then it has been consolidating.

Goldman Sachs updated FY22/23 net profit by -2%/+1% to mainly reflects updated retail estimates given mix shift between offline and e-commerce sales and private label mix as well as updated energy spreads.

“We also introduce FY24E EPS of Rs188.14. Our 12M SOTP-based TP changes modestly to Rs2,425/US$65.34 GDR (from Rs2,435/US$65.61 GDR),” it said.

Expectations from RIL AGM on June 24:

Over the next 12 months, we expect continued sequential earnings recovery. Goldman Sachs expects an update around these catalysts during the AGM on 24th June.

(1) telecom tariff hikes,
(2) new product launches with Google, Facebook and Microsoft, and
(3) potential value unlocking from a proposed energy business stake sale.
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