American multinational investment bank and financial services company Goldman Sachs has said in a report that with a potential for a 10 times growth in pre-tax profit from the business over the next decade, retail including e-commerce will be the next growth engine for Reliance Industries Ltd. (RIL).
RIL is an Indian multinational conglomerate that owns businesses across India engaged in energy, petrochemicals, textiles, natural resources, retail and telecommunications.
Apart from electronics and grocery retail, RIL is into apparel retail with its Reliance Trends (with over 800 retail stores across India), ajio.com and jiomart.com.
Goldman Sachs valued RIL’s retail business at US $ 88 billion in the base case and at US $ 120 billion bull case valuation based on stronger than expected macro growth and market share wins.
It valued RIL’s retail business using discounted cash flow (DCF) at US $ 57 billion for offline business and US $ 32 billion for e-commerce.
“We believe retail business (including e-commerce) is set to be the next growth engine for RIL, with potential for retail EBITDA to grow 10 times over the next 10 years,” the report said.
“We expect RIL core retail revenue to grow at a 36 per cent CAGR over the next four years to US $ 44 billion and e-commerce revenues to be 35 per cent of total retail revenues in FY25, at US $ 15 billion,” it further said.