Reliance Retail eclipses parent RIL’s market value amid grey market frenzy

The market for dealing in unlisted shares now gives the company a market capitalisation that dwarfs its parent firm

(RIL), which holds about 99.95 per cent stake in the retail firm.

Shares of Reliance Retail are trading at Rs 2,650-2,700 apiece in the unofficial market. At this price, the company’s valuation would be around Rs 18-19 lakh crore on a diluted basis against RIL’s total market-cap of Rs 13.3 crore.

Dealers say the unlisted stock is demanding an unbelievable scarcity premium, as demand is very high. Everyone is maniacal about it and nobody wants to sell it because of its prefix ‘Reliance’, they say.

Sandip Ginodia, CEO of Altius Investech, said investors are simply trying to hold a stake in India’s largest and fastest growing retail chain at any cost.

“Despite being a retail company, it is commanding an ‘extra’ premium for being an e-commerce player,” he said. “A strong bottom line with a hefty topline is adding to the allure.”

India’s apex court on Friday ruled in favor of Amazon to stall the sale of Future Group to Reliance Industries in a major victory for the American e-commerce giant in the key overseas market.

Reliance Retail had reached an agreement with Future Group a year ago to acquire the latter’s retail and wholesale business, as well as its logistics and warehousing business, for $3.4 billion.

Reliance Retail has been on a shopping spree in the past few months. It recently acquired a controlling stake in homegrown search engine Just Dial for $466 million. The company has also acquired or inked partnership deals with Netmeds, Urban Ladder, Hamleys, Fynd, which is triggering extra rush on the counter.

The retail behemoth is seeking to crack a deal with QSR chain Subway and recently announced a partnership with Swiggy. Mukesh Ambani had recently dropped a hint about listing the retail arm.

Sambhav Aggarwal of Delhi-based Arms Securities said the Supreme Court verdict did not have any negative impact on share price, as nobody is willing to sell Reliance Retail shares.

“Reliance Retail will be a one stop shop for all your needs. It is aiming to build one app for everything,” Aggarwal said. “The major price gain has most likely been on expectation of an imminent listing of the retail firm,” he said.