Will Reliance Retail’s Entry Into the Stock Market Be Another Walmart Moment?
Reliance Industries, one of the country’s major conglomerates, is soon to launch public share sales of Reliance Retail. The announcement to list the company in IPO could be made at the conglomerate’s upcoming Annual General Meeting later this year.
According to Business Line, the retail entity of Reliance is expected to collect funds in the range of Rs 50,000-75,000 crore through share sales. This is expected because the firm’s promoters would sell a minimum of 10% of their ownership in the public markets. As per the sources, the two firms will likely go public when the dust settles from the Russia-Ukraine crisis.
Will Reliance Retail’s IPO Launch Be Another Walmart Moment?
It is possible because Reliance Retail is establishing its dominance in the Indian retail market, just like Walmart has over the global market. Reliance Retail’s share price can achieve milestones similar to what Walmart’s stock prices have done over the years.
Walmart launched its IPO on October 1, 1970, and traded on the NYSE under the ticker code WMT. It falls under the Consumer Defensive section of the Discount Stores business. Walmart’s shares went public at an initial price of $16.50. The firm has experienced eleven 2-for-1 stock splits since then, three in the 1970s, five in the 1980s, and three in the 1990s. The stock price indicates the company’s tremendous growth. From a cut price of less than $1 in the early 1980s, the business surpassed $10 in 1991 and moved essentially sideways until the end of 1996. It subsequently started on the top at around $70 at the millennium’s turn.
Afterwards, there was a period of consolidation until 2018, when the symbolic $100 barrier was surpassed. The stock eventually continued to rise, reaching an all-time high of just under $150 in September 2020. Walmart is an ROI-paying company. The corporation pays a quarterly cash dividend to its shareholders and has a dividend policy of repeated yearly hikes.
According to Deloitte’s research titled “Global Powers of Retailing 2022: Resilience Despite Challenges,” Reliance Retail rated 56th on the Top 250 list based on retail revenue growth for FY2020. While Walmart is at the number one spot, followed by Amazon Inc.
Like Walmart, Reliance Retail is also known to undercut its competitors significantly with its private-label FMCG brands, which it now offers in its Reliance Fresh and Reliance Smart supermarkets and hypermarkets. Turning its limited product range to general trade will counter well-established foreign groups such as Unilever, Nestle, P&G, Reckitt, PepsiCo, and Coca-Cola, as well as domestic companies such as Dabur, Emami, Marico, ITC, Godrej Consumer, and Adani Wilmar, which last fiscal year surpassed Hindustan Unilever as India’s largest FMCG company, with a revenue of Rs 54,214 crore.
What Are The Key Factors?
Reliance Retail is India’s largest and most successful retail store business, with 39 million square feet of retail space (total space acquired by retail stores) and a reach in 7000 cities. It has a diverse retail presence in the groceries, electronic goods, clothing and lifestyle, and jewellery industries through a variety of shop types, including neighbourhood stores, groceries, hypermarkets, bulk cash and carry stores, and e-commerce (JioMart). Reliance Retail unlisted shares provide great growth investment options for investors since the organised retail market growth in the Indian retail industry was at 11% in FY2019 and is projected to rise to 18% by FY2024. The Indian retail market is expected to increase at a 10% annual rate over the next two years.
JioMart, the company’s online shopping platform, was established to supply groceries and fashion goods across 200 cities in India. The firm has also worked with worldwide retail brands such as Burberry, Bottega Veneta, Canali, Armani, Furla, Gas, Boss, Marks & Spencer, and others in the luxury, premium, and high-lifestyle segments through Reliance Brands Limited.
In addition to retailing various brands, the firm uses its own in-house brands to serve its customers better. Its brands include Desi Kitchen, Snactac and Goodlife in the food industry. It sells personal hygiene and home care products under the brand names My House, Enzo, Puric and Samvaad. It sells personal grooming and cosmetic goods under the brand names Petals, Glimmer, and Get Real.
The company has made selected acquisitions to increase its market share in the Indian retail business. The firm purchased the online furniture startup Urban Ladder and the Future Group. In the fiscal year 2021, the corporation earned $ 21 billion in sales.
It is possible that Reliance Retail’s entry into IPO can turn into Walmart-like dominance in the retail industry. Experts are indicating that Reliance Retail Share price may not perform exceptionally well after the initial years of its IPO launch. Those who wish to invest in the Indian retail industry and look for considerable gains can buy Reliance Retail Shares. However, investing in Reliance Retail’s pre-IPO share also let investors get considerable gains. They can buy unlisted shares of Reliance Retail via private stakeholders or a private trading platform. It is a soon-to-be-expired opportunity as the company is going public in the next few months.