- Market Capitalization of Reliance Industries is Rs. 8.04 lakh crores.
- Reliance Retail valuation is rich as compared to its competitors in the unofficial market.
Reliance Industries has not yet planned anything on drawing board for the listing of their retail arm but Investors are valuing the business way above of its listed peers. Reliance Retail, India’s biggest retailer by revenue crossed Rs. 2.5 lakh valuation last week in the unofficial market, or 75 percent more than the market capitalization of seven listed rivals put together.
Reliance Retail shares are currently sharing between Rs 475 and Rs. 500 apiece which started trading in the past two weeks in the unlisted market. These shares are owned by the company employees, said the brokers.
The market capitalization of Reliance Industries is Rs. 8.04 lakh crores which surpass those of Avenue Supermart, owner of DMart, Future Retail, Trent and Spencer’s put together.
Experts Opinion and Valuation
Sandip Ginodia, CEO, Abhishek Securities stated that There is a good demand for Reliance Retail shares in the unlisted market and the latest transactions were executed between Rs 475 and Rs 500, although the asking rate was Rs 700-800.
The mounting debt on the Reliance group can result in demerging and listing of Reliance Retail soon claimed Dharan Shah, managing partner, Jamnadas Virji Advisory. Reliance Industries’ net debt was Rs. 2.72 lakh crore as on March 31, 2019.
Shah also said, “The valuation of reliance retail is too expensive right now. The stock will attract traders when it is around Rs. 350-380 and for value investors, the stock must come close to Rs. 265-270 for its valuations to fall near its listed peers.”
Money Involved
Reliance Retail Limited is a subsidiary company of Reliance Industries Limited. Founded in 2006, it is the largest retailer in India in terms of revenue.
Reliance Retail became the first domestic retail company to post more than Rs 1 lakh crore in annual revenues. The company’s income in 2018-2019 was Rs. 1,30,556 crores, 89 percent more than the previous year’s Rs. 69,198 crores. It showed Rs. 6,201 crores as profit before depreciation, interest, and taxes (PBDIT) for the year. But Reliance Retail’s valuation is more than the listed peers in the unofficial market.
At Rs 500 apiece, Reliance Retail is at a Price to Earnings ratio (PE) — a popular valuation measure — of 200 times its FY2019 net profit. Its domestic competitors, Avenue Supermarts and Future Retail, are trading at 93 times and 33 times their FY19 earnings.
Global retail giant Walmart is currently trading at a PE of 22 while Tesco and Carrefour are traded at 17 times and 21 times, respectively.
With the unofficial market already giving so much value to Reliance Retail, Reliance Industries will be more than happy to list it in the market.
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