New Delhi, March 6 Reliance Industries Limited (RIL) is India's answer to Exxon, AT&T, and Amazon rolled into one, according to a research report by brokerage, Bernstein.
According to the report, RIL is a unique company with activities spanning oil and gas, telecoms, retail, media and fintech, and one of the most diversified conglomerates in India, if not the world. There is simply no other company like it, it said.
In India, Reliance dominates energy, telco, and retail in the same way that Exxon, AT&T, and Amazon do in the US.
Over the past decade, Reliance has been able to achieve market leadership positions in business segments that incumbent players and investors would never have thought possible. This is a testament to Reliance's management skills and its ability to navigate some of the complexities that come with being a large operator in India, the report said.
Despite some failures along the way, what has impressed most is the strategic vision and execution capability of Reliance management to enter and "win" in new business areas, analysts at Bernstein said.
Energy remains the cash cow of the business, but in the near term, it is likely to face margin pressure. Although Reliance plans to sell down a stake to Aramco, this does not mark a retreat from energy, with India likely to be the fastest-growing market for refined fuel products and petrochemicals over the next 20 years.
"In telecoms, we expect Reliance will increase its market share to 44 per cent by the end of FY22 as it consolidates its leadership position in the market," the report said.
Perhaps the greatest growth opportunity is in organised retail.
"We expect India's retail market, which is currently 90 per cent unorganised and ready for digital disruption, to reach $1.2 trillion by 2025," the report by Bernstein added.
Reliance is the offline leader with $18.5 billion in revenues and 11,000 plus stores. The company is best positioned in new commerce, digitizing neighbourhood stores (30 million), and eCommerce apps (JioMart and AJIO).
"Beyond retail, we see opportunities in fintech and media, where there are clear opportunities for synergies with telecoms. Reliance is at the start of a secular growth phase driven by telco, retail and new economy related businesses. It is a quality compounder that every Indian portfolio should own," the report added.
Reliance Industries (RIL) has disrupted the energy and telecoms industries in India and i s on the cusp of doing the same to retail, fintech, and media. With its enviable track record of innovation and execution, we believe the best is yet to come.
Energy remains core to the business and we expect further expansion in this sector. India is forecast to be the fastest-growing market for refined and chemical products over the next decade. Reliance partnerships with BP and Aramco should support this growth.
Reliance has achieved market leadership in telecoms. In just under three years, Reliance reached 34 per cent share of market revenue in India, higher than expectation. Based on current net add run-rates, it will likely reach 44 per cent share by the end of the next financial year.
The report has posed a question on could Reliance become India's Amazon?
Retail is a large market in India (estimated to reach $1.2 trillion by 2025), currently unorganised (90 per cent) and ready for digital disruption.
Reliance is the offline leader ($18.5 billion revenues, 11,000+ stores). The company is best positioned in New Commerce - digitizing neighbourhood stores (30 million) - and in eCommerce (Grocery/Fashion and Lifestyle categories).
( With inputs from IANS )