Reliance Retail defies consumption slowdown, reports 27% rise in revenue

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Updated: October 19, 2019 5:22:34 AM

The company claims its retail business has grown phenomenally, registering a seven-fold increase in revenue in the last six years and is now preparing to foray into e-commerce.

Reliance Retail, consumption slowdown, Reliance Retail revenue, industry news, Reliance Retail news, Reliance Retail limited, Reliance Retail brand, Reliance Retail ipo Profit before depreciation, interest, and taxes (PBDIT) grew 66.8% to Rs 2,322 crore in Q2FY20.

Reliance Retail on Friday reported a 27% year-on-year increase in revenues at Rs 41,202 crore in the three months ended September. The firm’s EBIT margin hit 4.9%, up by 110 basis points y-o-y on the back of customer centricity, operational efficiencies and expansion in tier three and four markets, it said in a statement. Reliance Industries’ chief financial officer Alok Agarwal said the company’s consumer businesses now contribute over 33% to the consolidated Ebitda. “The day is not far when their share would be 50%,” chairman and managing director Mukesh Ambani had said in August.

Reliance Retail that operates multi-format stores ranging from neighbourhood to supermarket and manages a clutch of brands has increased its store count to 10,091 spanning close to 7,000 towns in the country. The firm said it added 337 stores in the quarter. More than two-thirds of its stores are operated in tier two towns and beyond.

During the quarter, the company’s earnings before interest and tax (EBIT) showed an increase of 63.6% y-o-y, to Rs 2,035 crore. Profit before depreciation, interest, and taxes (PBDIT) grew 66.8% to Rs 2,322 crore in Q2FY20.

“The revenue for the quarter surpassed the milestone of Rs 40,000 crore. To put the scale in perspective, this is higher than the annual revenue registered by the next largest retailer in the country,” the firm said. Providing superior shopping experience to customers led to footfalls across stores and double-digit growth in customers served, it added. The retailer received over 12 million footfalls, a growth of 13% y-o-y during the big sale period between August 10-15.

The company claims its retail business has grown phenomenally, registering a seven-fold increase in revenue in the last six years and is now preparing to foray into e-commerce. The firm’s first project on which pilot programmes have started is to build a B2B platform targeted at merchants who run grocery, fruits and vegetable stores in the neighbourhood markets. The company has termed it ‘Hybrid Online-to-Offline’ platform. At a later stage, this B2B platform would be connected to the MyJio app and thus provide the B2C interface also, sources had told FE.

“The main purpose of New Commerce is to completely transform the unorganised retail market, which accounts for 90% of India’s retail industry. Together, Reliance Retail and New Commerce will become the proxy to India’s consumption story,” Ambani had said.
In grocery segment, Reliance Retail’s Fresh, Smart and Market stores witnessed strong growth backed by new store expansion and same store sales growth of 14%. In Consumer Electronics, Reliance Digital posted same store sales growth of 12%. The retailer added 100 new electronics stores during the quarter taking the tally to over 8,200 stores. Lifestyle chain Reliance Trends expanded presence to over 400 cities, the firm said.

Analysts at Deloitte estimate India’s retail industry to reach $1,200 billion by 2021 and $1,750 billion by 2026. Of the total retail market, food and groceries comprise the largest share, followed by apparel and footwear.

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