Reliance Retail has made the decision to cancel its public shares, which places a value of $149 billion on Mukesh Ambanis’ retail business. This move impacts just 0.09% of the public stake. While Reliance Industries Limited (RIL) holds a market cap of $218 billion. Estimates for valuation range from $93 to $97 billion. The proposal to cancel shares has obtained approval from the board. Furthermore. Reliance Retail has reported impressive growth in FY23. Witnessing a notable 30% increase in both net profit and revenues.

Reliance Retail made an announcement on Friday that its board has given the green light to a proposal for canceling the equity shares held by the public shareholders. The company has decided to offer ₹1,362 per share for the unlisted stock being canceled, which values 

Mukesh Ambani’s retail business at a staggering $149 billion (₹12.31 lakh crore). Interestingly, this price per share accounts for as much as 70% of the market capitalization of Reliance Industries (RIL), its parent company, which is valued at $218 billion (₹18.01-lakh crore).

In a report from May, the global investment firm Bernstein assessed the holding company of Reliance Retail, known as Reliance Retail Ventures (RRVL), at $131 billion (₹10.82 lakh crore). RIL holds an 85% stake in RRVL, which, in turn, owns more than 99% of Reliance Retail.

Comparing these figures to other notable companies, Tata Consultancy Services, India’s largest services exporter and a highly valued entity of the Tata Group, holds a market capitalization of $148 billion (₹12.23 lakh crore). Additionally, it is anticipated that HDFC Bank, a private sector lender that has merged with HDFC, will possess a market capitalization exceeding $170 billion (₹14.04 lakh crore) after the shares of the mortgage lender are eliminated next week.

Two independent valuers, Ernst & Young Merchant Banking Services and BDO Valuation Advisory, have determined the fair value of Reliance Retail to be ₹884.03 and ₹849.08 per share, respectively. This valuation suggests that the firm’s worth lies within the range of $93-$97 billion (₹7.68-8.01 lakh crore).

The promoter RRVL, a fully-owned subsidiary of RIL, currently holds a 99.91% stake in Reliance Retail, leaving only 0.09% in the hands of the public, represented by 7,865,423 equity shares.

Reliance Retail revealed that during a board meeting on July 4, 2023, they approved the proposal to decrease the equity share capital held by shareholders other than its promoter and holding company, RRVL.

In terms of the trading activity of Reliance Retail shares, Narottam Dharawat of Dharawat Securities, based in Mumbai, disclosed that they are currently privately traded at ₹2,700-2,800 per share. It is worth noting that the stock reached a record high of ₹4,300 last year. Brokers have reported that approximately 250,000 shares of Reliance Retail were traded in June 2023.

Back in December 2019, when Reliance Retail stock was trading around ₹900 per share, RIL introduced a scheme of arrangement offering one share of RIL in exchange for four shares of Reliance Retail to its shareholders. This scheme valued the Reliance Retail shares at roughly ₹380 per share. However, in a subsequent extraordinary general meeting (EGM) held in January 2020, Reliance modified the share-swap scheme for retail venture shareholders, making it optional instead of mandatory.

Reliance Retail operates as a subsidiary of RIL. In 2020, RRVL raised approximately ₹47,265 crore from global private equity funds, acquiring a 10.09% stake and valuing the company at ₹4.2 lakh crore, or over $50 billion at the current exchange rates. 

Reliance Retail showcased a noteworthy year-on-year net profit growth of 30% in FY23, amounting to ₹9,181 crore, while its revenues also expanded by 30% in FY23, reaching ₹2.6 lakh crore.