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  • 25 Jul 2022
  • ICICIdirect Research

RELIANCE RETAIL EBITDA MARGIN GRADUALLY INCHES AHEAD AMID FLATTISH REVENUE GROWTH (QOQ)

RELIANCE - 1284 Change: -21.90 (-1.68 %)

News: Reliance Retail: Results were a mixed bag with beat on the EBITDA front, however revenues were below our estimates. On a favourable base, revenue grew by 51% YoY (flattish QoQ) to Rs 58544 crore. While company witnessed healthy recovery in footfalls (from 104% of pre-covid levels in Q4FY22 to 119% in Q1FY23) the same did not reflect in QoQ growth. Core retail revenue (exc. JIO sales), grew by 80% YoY. Store addition trajectory continued to be robust with addition of 792 stores taking the total store count to 15866 stores. Better product mix and positive operating leverage, resulted in EBITDA margins expanding by 150 bps YoY (20 bps QoQ) to 6.6%. Absolute EBITDA nearly doubled YoY to Rs 3837 crore.

Views: Retail coverage area now stands at 45.5 million (three year CAGR: 25%), which is well ahead of any other Indian retailer. Over the last five years revenue and EBITDA have grown at a robust CAGR of 43% and 57%, respectively (FY17-22). . Company bolstered its offering and continued to fill white spaces through acquisitions (franchise agreements with brand GAP, Tod, Pret A Manger). Reliance Retail’s widespread physical store network would further enhance its omni-channel capabilities (~19% 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: Neutral