Ocado will become the “Microsoft of retail” following a decision by the Competition and Markets Authority (CMA) to de-designate the grocers as a retailer.

Once the CMA’s decision, made in November, is finalised it will secure Ocado as the largest listed technology company by valuation in the UK.

Analysts said if Ocado Solutions business gains more market share it could place it as one of the biggest technology companies on the FTSE with the potential to generate £3.5bn per annum.

Peel Hunt analysts highlight the growth areas for Ocado. Its most recent tie-up with Aeon could see around 26% of the Japanese supermarket group’s revenue move online by 2035.

Peel Hunt analyst James Lockyer said: “The winds of change continue, driven by the CMA’s decision to de-designate Ocado Group as a food retailer in the UK following its successful joint venture with M&S.

“Once finalised, Ocado will be the largest listed technology company by valuation in the UK.

“The valuation is based on execution of its nine deals with, at a minimum, £1.1bn potential recurring revenue pa over the medium term. Taking a 25% share of its total addressable market could see around £3.5bn recurring pa.

“We also look at the long term as it shifts away from food retail to be the de facto ‘Microsoft of retail’.”

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