Why Mukesh Ambani is betting on Reliance Retail to spearhead RIL’s future growth

As of FY23, the retail business contributed 12 percent to the group’s EBITDA, up from 7 percent in FY19. This growth has been gradual in case of retail compared to Jio (from 17 percent in FY19 to 34 percent in FY23).

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26 Aug, 2025 12:21

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Mukesh Ambani is banking on Reliance Retail to spearhead Reliance Industries’ next phase of growth, as the group’s oil-to-chemicals and Jio telecom businesses search for future drivers. Mukesh Ambani, Chairman of RIL, said at the company's 46th Annual General meeting on August 28 that Reliance Retail will emerge as the group’s most rapidly expanding business.

Ambani expects this rapid growth in retail business will be fueled as Indians get more affluent, the company opens more stores and makes shopping easier on mobile and digital devices. “I am confident that as India grows from a $2,500 per-capita economy to a $10,000 per-capita economy, Reliance Retail will be our fastest growing business in revenues and EBITDA,” Mukesh Ambani said at the AGM.

How Reliance Retail growth fares vs O2C, JIo telecom

In the last five years (FY19-23), Reliance Retail segment EBITDA grew at 30.53 percent per year. This is slower than the growth rate of Oil & Gas (71 percent, which was led largely by geopolitical upheaval and may not sustain), and digital services including telecom business Jio (35 percent). However, Retail segment EBITDA in FY2022-23 grew at a stunning 44.7 percent YoY to Rs 17,974 crore.

As of FY23, the retail business contributed 12 percent to the group’s EBITDA, up from 7 percent in FY19. This growth has been gradual in the case of retail compared to Jio (from 17 percent in FY19 to 34 percent in FY23).

How Reliance Retail will grow faster than other units

Reliance is banking on the rising income of Indians to grow its business as expressed by Ambani in his speech. In the last 10 years, India’s per capita income has grown at a CAGR of 5.23 percent. Assuming this rate continues, it will take 27 years for the per capita income to reach $10,000 (at current conversion rate of USD and INR).

To capture this rise in income, RIL is aggressively opening new stores. The retail business expanded its network with over 3,300 new stores during the financial year 2023, taking the store tally to 18,040 stores pan-India. This marks a growth of about 22 percent YoY.

Also read: Reliance Retail will be our fastest growing business in revenues and EBITDA: RIL Chairman

“I do expect high double-digit growth led by store additions and operating leverage,” said an analyst with a prominent Mumbai-based brokerage firm who covers Reliance Industries but is not allowed to speak to the media.

“Reliance Retail now caters to more than 90 percent of daily Indian household needs; and currently serves over 98 percent of India’s PIN codes through integrated online and offline channels,” said Hemang Khanna, a research analyst at Hemang Khanna.

Analysts are also watching that growth has stagnated in O2C (oil-to-chemicals) business (flat during FY19-23), and any growth in Jio telecom business will have to come only if there are tariff hikes and monetisation of 5G services as the telecom market is already saturated. Fiber internet services can be an incremental growth driver though.

Also Read: Several marquee investors have shown strong interest in Reliance Retail: Mukesh Ambani

In such a scenario, the retail segment will likely spearhead growth.

Reliance Retail: Growth markers

There are several other signs that give confidence to analysts. Reliance Retail sold more than 18 lakh tons of groceries in FY23. The company launched Campa Cola in FY23, and plans to scale it up further in India and expand it into Asian and African markets. The launch of JioMart on WhatsApp has led to a sharp 9x growth of JioMart customers on the platform since its launch in FY22. Its digital and new commerce sales contributed Rs 50,000 crore in FY23, accounting for 20 percent of its retail business revenue.

Overall, brokerages have maintained their ratings and target prices on RIL stock -- India's most valuable company. They are a tad concerned about the market's disappointment due to the absence of a spin-off timeline guidance for Jio and Retail. With the AGM concluded, attention is expected to turn toward earnings, which analysts predict will now be the primary focus.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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