Reliance Retail valued at Rs 7

Reliance Retail valued at Rs 7.4-7.7 trillion by EY, BDO

R

R

Reliance Retail (RRL) has been valued at Rs 7.42-7.72 trillion ($90-93 billion) by two global consultants, ahead of a possible initial stake sale by its parent Reliance Industries (RIL). Only three other companies – RIL, Tata Consultancy Services and HDFC Bank – have a higher valuation than RRL.

On Friday, RIL proposed to reduce the share capital of its unlisted subsidiary RRL by buying it back from shareholders, other than promoters and holding company, at Rs 1,362 per share. This is based on the valuation by two independent valuers, RIL said in a stock exchange update, adding it has received board approvals for the proposal on Friday.

RIL will buy back the shares that are trading in the grey market and offered to employees as stock options. Following the approvals, RIL will extinguish the shares.

Reliance Retail Ventures (RRVL) – in which RIL holds an 85.06% stake – owns 99.93% in RRL, while the remaining 7.86 million shares are held by other shareholders.

Both the global consultants were appointed by RIL. While E&Y valued RRL’s shares at Rs 884.03 per share, BDO Valuation Advisory’s figure was Rs 849.08 per share. This takes the company’s valuation to a total of Rs 7.42 and Rs 7.72 trillion, respectively.

RIL’s proposal to buy shares at Rs 1,362 a piece is at a premium of Rs 477.97 and Rs 512.92 a share as against that determined by the valuers.

The proposal is subject to approvals from shareholders, which the company will seek through a special resolution, and the National Company Law Tribunal’s Mumbai bench.

Earlier in 2020, Reliance Retail Ventures raised `47,265 crore ($5.72 billion) for a 10.09% stake in the company, valuing it at roughly $57 billion. Prior to that in 2019, RIL chairman Mukesh Ambani had said the group intends to list RRL – which operates 18,040 stores, supermarkets, fashion stores and online grocery store JioMart – along with its telecom arm, Reliance Jio Infocomm, in five years’ time.

Ahead of the announcement, RIL’s share prices closed flat at `2,629 a share on the NSE on Friday.