Oil-to-telecom giant Reliance Industries (RIL) which has largely seen its growth coming on the back of its petrochemical business over the past decades, is set to see a shift in the anchor’s role with the retail business, including its e-commerce operations, to drive the company’s growth.

A Goldman Sachs report noted that after growing 5x over FY16-FY20, RIL’s core retail revenue growth has taken a pause in FY21 due to Covid related macro headwinds.

“However, we believe retail business (including e-commerce) is set to be the next growth engine for RIL, with potential for retail EBITDA to grow 10x over the next 10 years,” it said.

During the macro downturn, RIL has focused on building strong digital capabilities and Goldman Sachs said that the scale-up in omni-channel offering is driving sizeable market share wins.

It sees a six-fold increase in grocery organised retail penetration in India by FY30, coupled with 15 per cent market share gain for RIL.

“We expect RIL core retail revenue to grow at a 36 per cent CAGR over the next four years to $44 bn and e-commerce revenues to be 35 per cent of total retail revenues in FY25, at $15 bn,” it said.

“We value RIL retail business at $88 bn in our base case with our offline business valuation similar to comps and online business valuation at the high end of the peer group given higher GMV growth. We also highlight our bull case valuation of $120 bn based on stronger than expected macro growth and market share wins.”

Reliance’s Retail business had showcased significant pre-Covid growth, with core retail revenues growing 5x during FY16-FY20 at a 50 per cent CAGR.

While growth has taken a pause in FY21 due to Covid related lower footfalls causing a downturn in the retail industry, RIL’s retail business has focused on building strong digital capabilities while continuing to expand its physical reach. It expects significant market share, alongside the post covid macro reset, to drive significant growth for RIL retail.

“We expect RIL core retail revenue to grow at a 36 per cent CAGR over next four years to $44 bn and expect e-commerce revenues to be 35 per cent of total revenues in FY25 at $15 bn,” it said.