With a potential for a 10x growth in pre-tax profit from the business over the next decade, retail including  e-commerce will be the next growth engine for Reliance Industries  Ltd, Goldman Sachs said in a report.

After growing 5x over FY16-FY20, RIL’s core retail revenue growth has taken a pause in FY21 (April 2020 to March 2021) due to Covid  related macro headwinds including lower footfalls.

The oil-to-telecom conglomerate run by billionaire Mukesh Ambani  used the period to build strong digital capabilities of the retail business while continuing to expand its physical reach.

“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,” the brokerage said.

During the macro downturn, RIL has focused on building strong digital capabilities and the scale-up in omnichannel offering is driving sizeable market share wins.

“We see 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 USD 44 billion and e-commerce revenues  to be 35 per cent of total retail revenues in FY25, at USD 15 billion,” it said.

It forecast a 50 per cent market share for RIL in online grocery by FY25, with a 30 per cent market share in overall e-commerce. This translates into USD 35 billion e-commerce GMV (gross merchandise value) for RIL by FY25, with USD 19 billion in grocery.

“Overall, we expect retail EBITDA to grow 10x from current levels by FY30,” it said.

Goldman Sachs valued RIL’s retail business at USD 88 billion in the base case and at USD 120 billion bull case valuation based on  stronger than expected macro growth and market share wins.

It valued RIL’s retail business using discounted cash flow (DCF) at USD 57 billion for offline business and USD 32 billion for e-commerce.

“We see a multi-year runway of growth driven by our expectation of growing organised retailing in India from a 2.6 per cent share  today to a 13.2 per cent share in FY30 and rising market share for  RIL in organised retailing due to its omnichannel strategy with a  market share going from 41.5 per cent now to 54.7 per cent in FY30,” it said.

With a USD 400 billion GMV, grocery is the largest retail category in India, accounting for 60 per cent of the total retail market.