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- 25 Oct 2022
- ICICIdirect Research
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RELIANCE RETAIL CONTINUES TO MAINTAIN STRONG REVENUE GROWTH MOMENTUM
News:
Reliance Retail reported a healthy operational performance in Q2FY23 with key highlight being robust square feet addition. Revenue for the quarter grew 43% YoY to Rs 64920 crore (I-direct estimate: Rs 63795 crore) with core retail revenue (excluding JIO sales) increasing by ~60% YoY (three year CAGR: 19%). Performance on the profitability front was even more impressive, with company recording 120 bps YoY expansion in EBITDA margins to 6.6% (excluding other income). Absolute EBITDA grew robustly by 76% YoY to Rs 4286 crore (I-direct estimate: Rs 4019 crore).
View:
Reliance Retail, over the last five years, has created world class ecosystem (online+offline) with unmatched scale (revenue and stores significantly ahead of peers). During Q2FY23, while store openings of 795 were similar to that of Q1FY23 (792 store), addition in terms of square feet has been humongous at 9.2 million square feet (Q1FY23: 4.3 million). This translates into larger size store additions in Q2FY23 with average store size of 11000+ sq. ft. (Q1FY23: ~5000). Retail coverage area now has crossed 50 million (three year CAGR: 30%), which is more than 4x the size of the second largest retailer. Reliance Retail’s widespread physical store network would further enhance its omni-channel capabilities (~18% of revenues) and position it as a frontrunner to garner consistent business growth by capturing a larger pie of the Indian retail sector opportunity.
Impact:
Positive.