Bernstein has 'outperform' rating on Reliance Industries, calls RRVL 'king of India retail'

It said Reliance Retail, India's largest organised retailer in terms of revenue and store network, has built an end-to-end strategy across new commerce, offline retail and e-commerce. According to the brokerage, which described Reliance Retail as "king of India retail":

New commerce will empower unorganised kirana stores

Offline retail will be driven by depth in scale and execution

E-commerce will continue to scale rapidly as Indian consumers look for wider selection and convenience

"We expect new commerce to expand at 100 percent-plus CAGR. e-commerce to grow at 65 percent-plus CAGR during FY22-25. Non-core retail will be driven by JioPhone recharges and grow at 20 percent CAGR with pass

through margins," Bernstein said.

: Mukesh Ambani says India likely to become 3rd biggest economy by 2030

In January, Reliance Retail reported a 27 percent sequential increase in revenue to Rs 57,717 crore for the third quarter of FY22. Its EBITDA rose 31.2 percent to Rs 3,835 crore.

The expansion in the company's operating EBITDA margin was led by a two-fold increase in fashion, apparels and footwears, according to the brokerage.

Bernstein values Reliance Industries' refinery and petrochem segments at 7.5 times and and 7.9 times FY23 EV/EBITDA respectively based on comparable peer multiples.

"For Digital Services, we value Jio at $90 billion gross or $60 billion net to Reliance. This is based on a DCF of the telecom business assuming 10% WACC (weighted average cost of capital). For Retail, our EV/EBITDA multiple for core retail is based on a 25 times multiple given rapid growth in the segment while we value the non-core retail at 12 times. Our valuation for e-commerce is based on seven times FY22 EV/sales," the brokerage said.

Bernstein used comparable 2025 EV/sales multiples for each segment for Reliance Industries' new energy business. "For the electrolyser business, we use 3.9 times EV/sales, fuel cell at 2.7 times, batteries at 2.0 times and solar at 1.4 times," it added.

Reliance Industries' consolidated net profit had jumped to a record Rs 18,549 crore for Q3 from Rs 13,680 crore sequentially, beating Street estimates. Its revenue increased 10.4 percent to Rs 1.85 lakh crore.