Creation Of The Retail Empire- Reliance

27/05/2022

Many if not all, should be knowing the artistic quality that Reliance holds of dominating every sector that they get into. Sometimes also known as an industry disruptor, a company with the midas touch.

It all started in 2006, Reliance Industries got into the retail segment with their then flagship store by the name " Reliance Fresh ". Catering to essential products such as fresh fruits, vegetables, cereals to spices, and personal care products. They currently have stores in 90+ cities in India and more than 700 stores, an average of 7-9 stores per city.

The retail segment has come far ahead and is more than what it used to be in 2006.

Currently Reliance Retail has 15 arms under them:

• Reliance Fresh

• Reliance Smart

• Reliance Smart Point

• Jio Mart

• Reliance Digital

• Jio Store

• Reliance Trends

• Project Eve

• Trends Footwear

• Reliance Jewels

• Ajio

• Reliance Brands

• Reliance Mall

• Reliance Consumer Brands

• Seven-Eleven

The picture presented above shows the breakup of the brands under " Reliance Brands". A slew of global partnerships, does not only diversify the company within the retail segment but also brings a great number of choices for the end consumer, satisfying different needs of different levels of consumer hence helping in increasing the topline.

Recently Reliance Retail (RR) is also in a acquisition spree. The latest ones are mentioned below:

In the last three years, RR acquired stakes in about 25 companies. Reliance Retail has acquired 100% in a well known Coimbatore based grocery store by the name Shri Kannan Departmental Store for Rs. 152.5 Crore.

A big deal that didn't make up to the list of the acquisitions by RR is of the Future Group. Reliance was set to take up retail and logistics business of Future Group for Rs. 24,713 crores. A big fuss which included Amazon, Future Retail and Reliance that went on for months finally ended with Reliance not acquiring Future Retail as the 100% secured creditors voted against the scheme.

Retail presence highlights:

• 12,000+ stores

• Presence in more than 7000 cities

• 150 million + customer base

Under Reliance Consumer Brands, they have curated a basket of products which have been produced by them under the "Make In India" scheme, a domestic competition to overseas created products sold within India.

• The retail business of Reliance constituted only 6.17% of revenue in 2015-16.

• The retail business of Reliance has drastically increased in terms of revenue % to 26.90% !

• Retail sector of Reliance has seen a paradigm shift from 2015, thanks to a slew of acquisitions and new ventures within the retail sector.

2006- Reliance Fresh

2007- Reliance Digital

2008- Reliance Trends And Reliance Footprint

2011- Reliance Market

2014- Reliance Digital Express mini

2016- Ajio

2017- Launch of Reliance Trends e-commerce website

2018-2019: Abnormal growth of Jio Points, Presence in more than 4000 cities, 3,736 Jio Points

2019- 100% acquisition of Hamleys for Rs. 620 Crores

2020- Launched Jio Mart

It has a total of 1,600 stores of Reliance Trends and 8,600 stores of Reliance Digital.

Now if one had to invest in Reliance Retail, they cannot do so as they don't have their line of business in retail listed separately. So one has to invest in their listed business of Reliance Industries Limited, NSE:RELIANCE, of which Reliance Retail is their fully owned subsidiary.

Above I have presented a ratio chart comparing the NIFTY50 index which comprises of the largest top 50 blue chip stocks in our country, Which includes Reliance Industries Limited to Reliance Industries Limited.

This being a monthly chart, every candle has the prices of one particular month's price action data.

When we closely notice, if one had been a part of the journey that had started in 1995, a staggering 7000% returns could be made if invested in Reliance and a return of 1198% could be made if invested in the NIFTY50 Index fund. This is a perfect example of a relative strength chart.

Where RIL has showed relative strength when compared to the index. A 7x more return if invested in Reliance rather than the index.

Now technically let us see the chart of Reliance and where it can go from present levels:

• Now when we look at the weekly chart usually analyzed for a time frame of 6 months to 1 year, we observe that the stock has been making a series of higher highs and higher lows, indicating it is in a bullish trend. Now what does this indicate, this indicates that the stock can see potential upside from here, because with every minor pull back there is more buying interest because of which the price keeps making new highs.

• The basic principal of riding any trend is to buy low and sell high. So logically one has to buy at the lower end of the channel and sell at the higher end.

• What I see here is that there might not be a possible pullback till the end of the channel and the reversal is already done from present levels. And substantial upside can be seen from here.

Overall: A structural story is in the making. And other than retail aspect of Reliance, it is become a household name and I feel every person with a demat account irrespective of their time frame of investment or goals should have Reliance a part of their portfolio. :)

Shivam M. Dave