BofA Securities is betting on Reliance Industries ‘layer of commerce’

News Journals

4 years ago

After constructing a ‘digital layer’ (Jio Platforms) on prime of the present ‘bodily layer’ of retail retailers, Reliance Industries would over the subsequent 4 years concentrate on including a 3rd ‘layer of commerce’ and monetize the present investments, BofA Securities mentioned.

RIL can be trying to leverage the customers’ digital footprint and earn incremental revenues from digital adverts, digital lending and even engagements like play together with IPL, KBC, and many others, it mentioned in a report.

Over the subsequent 3-5 years, RIL is anticipated to have 500 million cell customers, supply broadband companies to 20-25 million households, and cater to 12-15 million small companies.

“Within the final 4 years, with Jio, RIL has been in a position to construct a ‘digital layer’ on prime of the present ‘bodily layer’ of retail retailers throughout electronics, grocery, and attire in addition to depth and width of India.

“We consider the subsequent 4 years, RIL’s focus could be so as to add a 3rd ‘layer of commerce’ and monetize the present investments throughout totally different codecs,” the brokerage mentioned.

Jio has 388 million subscribers on the finish of FY20. Reliance has tied up with WhatsApp to ship grocery gadgets from native Kirana shops to clients.

Like Amazon, Alibaba, and Tencent, RIL has the potential to create shareholder worth to retain its clients, BofA Securities believes.

“RIL’s strategy of proudly owning the ‘pipe’ in addition to the ‘companies’ provided on the pipe ought to assist it hold the subscriber base captive and aside from the core telco and retail choices, the corporate may additionally supply different companies,” it mentioned.

As an example, leisure choices would assist RIL enhance stickiness. Jio might not absolutely monetize this however would hold customers captive to cross-sell different choices.

RIL can be specializing in leveraging tech to supply ed-tech, health-tech, agri-tech companies.

“We additionally consider gaming will pick-up in India because the nation has younger inhabitants combine,” it mentioned.

An omnichannel strategy on commerce would assist RIL promote its grocery, attire, and electronics gadgets to a wider viewers base.

“By working with the kiranas, RIL would probably improve its B2B gross sales as nicely,” BofA mentioned.

Stating that potential stake sale on the retail enterprise shall be a catalyst, it mentioned Reliance Retail might observe the Jio Platforms mannequin, onboarding a number of traders by promoting stakes within the agency.

RIL has reportedly provided all 13 traders of Jio Platforms (together with Facebook, Google and many others) the choice to spend money on its retail unit.

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