Analysts, however, ascribe a slight premium to Dmart
as compared to Reliance Retail’s grocery segment. While the grocery segment of Reliance Retail is pegged at 22 times enterprise value (EV) to operating profit for FY21, the same for Avenue is at 25 per cent. For the the fashion and lifestyle segment, valuations
are similar to that of Aditya Birla Fashion and Retail at 22 times FY21 EV/operating profit. The street value for the other three segments of consumer electronics, connectivity and petro retail segments (no listed peers) is between 5-15 times of EV/Operating profit.
Reliance Retail’s growth on the revenue and operating profit front has so far been driven by the consumer electronics segment which accounted for 53 per cent of core retail sales. In fact, this segment accounted for over 60 per cent of the core retail revenues over FY14-19 and half its operating profits. However, analysts believe that revenue growth from the segment will cool off as the pace of Jio device sales falls. HDFC Securities expects the groceries segment to be the growth driver of Reliance Retail which will account for half its consolidated sales by FY22. Currently, groceries account for 20 per cent of sales.