The energy-to-digital conglomerate Reliance Industries (RIL) has built a “digital layer” (Jio Platforms) on top of the existing “physical layer” of retail shops across electronics, groceries, and apparels in the last four years. The company is now believed to have added a third “layer of commerce” to monetise the existing investments in the next four years.

RIL is also looking to leverage the users’ digital footprint and earn incremental revenues from digital ads, digital lending, and even engagements like play along with IPL, KBC, etc., BofA Securities said in a report.

Over the next 3-5 years, RIL is expected to have 500 million mobile users, offer broadband services to 20-25 million households and cater to 12-15 million SMEs.

“RIL’s approach of owning the “pipe” as well as the “services” offered on the pipe should help it keep the subs base captive and apart from the core telco and retail offerings, the company could also offer other services,” the report said.

For instance, entertainment offerings would help RIL improve stickiness. Jio may not fully monetize this but would keep users captive to cross-sell other offerings.

“RIL is also focusing on leveraging tech to offer Ed-tech, Health-tech, Agri-tech services. We also believe gaming will pick-up in India as the country has a young population mix with the world’s largest Gen Z workforce,” the report added.

An omnichannel approach on commerce would help RIL sell its grocery, apparel and electronics items to a wider audience base. By working with the Kiranas, RIL would likely increase its B2B sales as well, it noted.

The company continues to invest in technology and is partnering with world’s best (Google, Facebook, Microsoft) as well as India’s best (invested in 20+ startups).

The shares of RIL has seen a robust rally of 144 percent from its 52-week low of Rs 867.82 hit on March 23, 2020.

Although BofA expects some time-correction in the near-term given recent outperformance, it finds risk-reward favorable from a 12-m perspective and maintains Buy with a target price of Rs 2,355 per share.

(Disclosure:

Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)