Will the Justdial acquisition add value to Reliance Retail?

Reliance Retail Ventures would be acquiring a 66.95 per cent stake in listing platform, Justdial, for Rs 3,497 crore. However, stock market analysts are not sure if the deal will create value for the homegrown retail giant. "Justdial is a B2B directory business, I am not sure how if it will help Reliance Retail, which is building a consumer-facing business," says Arun Kejriwal, Founder, Kejriwal Research and Investment Services.

Though acquiring a B2B listing business falls in place with Reliance Chairman, Mukesh Ambani's ambition of empowering local businesses, analysts wonder why Ambani needed to acquire Justdial when he has partnerships with the likes of Google and Facebook, whose database of B2B entrepreneurs is far richer. "I don't see much value for Reliance. It could be beneficial for Justdial as Google has considerably eaten into its business and it may make sense for it to be on the same side as Google," points out a senior stock market analyst.

"If you look for restaurants in your vicinity on Google, it will not only show you a list of restaurants but also the menu cards. Google data is far more effective. In terms of B2B data also, Google has a clear edge. Being a B2C company, it would make more sense for Reliance to acquire Zomato or Swiggy, which will give access to high quality B2C data," adds Kejriwal.

However, there is a section of the industry which sees merit in the acquisition. "It is like putting pieces together of a larger puzzle and the picture is now beginning to emerge. Reliance is working on a picture which is aiming for assisted commerce for ramping up the Jio Mart business. It is looking at local businesses as key partners, and through them it is also looking at capturing high share of consumer consumption. Having information and data about local businesses is like a gold mine," explains Ankur Bisen, Senior Vice-President, Technopak Advisors.

"The deal will be quite beneficial to Reliance as it will bring in lot of data and users. When it comes to looking for a carpenter, salon, tailor or even a restaurant that serves a typical kind of cuisine, we often go to the Justdial app for options. Reliance will use this data to expand its JioMart services. It has already started using kirana stores for last mile delivery. Reliance will play a role in enriching local businesses and creating value," explains the former CEO of a leading retail company.

Reliance Retail Ventures will hold 40.95 per cent and will make an open offer to acquire up to 26 per cent in accordance with takeover regulations, the company said in stock exchange filings.  The buzz around Reliance's potential acquisition of Justdial on Thursday took up its share price by 4 per cent. Justdial share has risen 76.63 per cent since the beginning of this year and gained 201.77 per cent in one year.

Also read: Will the Justdial acquisition add value to Reliance Retail?