Why investors / consumers were buying what Reliance Retail is selling

Public memory is short, but the 2020 US$26 billion mega fundraise by Reliance is hard to forget. For those of us in the media trying to make sense of it all, it felt like playing tennis against a machine that throws tennis balls at you indefatigably. Some 18 months later, Jio Platforms is on the sideline; Reliance Retail sits at the center of the court like a Grand Slam title holder. India’s largest retailer is now worth US$207 billion in the unlisted market, much higher than what analysts think it’s worth, and even more than Reliance’s market cap. Its shares have more than doubled in the past year. In comparison, DMart, the second largest and listed retail company, has risen 25%. Of course, there’s a scarcity premium—99.95% of Reliance Retail is held by the parent and the investors that participated in the 2020 fundraise—but there’s a distinct rally which eclipses the other two businesses of the conglomerate. Analysts value the retail unit at US$125 billion, twice as much as its holding company was worth in 2020 when Reliance sold its stakes. While Jio Platforms was the toast of the town then, today it's worth US$98 billion, a rise of just 45%. (The refining and petrochemicals division is valued at US$62 billion.) Sector watchers don’t question Reliance Retail’s revenues but they can’t comprehend its margins. And the fact that RIL is progressively cutting down on disclosures or details on the segment splits, makes the stock more like a take-it-or-leave-it proposition. “I have collected 60 data points on Reliance Retail, and the only ones where there is consistency in reporting are revenue and stores opened,” says one market analyst. This opaqueness could be stopping investors from valuing Reliance Retail even higher but it’s certainly not stopping them from being awestruck. Therefore, here we at www.multimediastudio.net

The MMS argues why Reliance is a retail-first and everything-next company