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RIL's revenue from Organized Retail Business up 27% YoY to Rs. 41202 crore in Q2

Posted On: 2019-10-20 09:51:23


Segment Revenues for 2Q FY20 grew by 27.0% Y-o-Y to Rs. 41,202 crore with strong growth across formats despite consumption slowdown as against Rs. 32,436 crore in the corresponding period of the previous year. Business PBDIT for 2Q FY20 grew by 66.8% Y-o-Y to Rs. 2,322 crore as against Rs. 1,392 crore in previous year. EBIT margins improved 110 bps to 4.9% led by customer centricity, operational efficiencies and expansion in Tier 3 and Tier 4 markets. During the quarter, Reliance Retail added 337 stores taking the total store count to 10,901 stores, with area under operations of 24.5 Mn.sq.ft.

RIL - Organized Retail Business - Q2 FY 2019-20

Reliance Retail, as India's foremost retail company, is making significant strides in its mission on enhancing the quality of life for Indians. The business continues to serve the needs of millions of customers by providing them access to a wide range of quality products and services at compelling value and reaching the length and breadth of the country through an extensive network of physical stores and digital platforms.

In the backdrop of a slowing growth environment during the quarter, Reliance Retail delivered a resilient performance and sustained its strong track record of robust revenue growth and profit improvement. The business continued to scale new highs as it registered the highest ever revenue and EBITDA in a quarter. Further, the consistency of its performance is demonstrated in the fact that this is the 14th successive quarter of revenue and profit increase.

Overall, Segment Revenue at Rs. 41,202 crore for the quarter, was up 27% over the corresponding period of the previous year. This growth is robust and competitive given the broader market context. Among a range of factors that enables the growth, is the relentless commitment to delight customers and heighten the shopping experience for them. This led to footfalls across stores and double-digit growth in customers served and it also strengthened the win-win relationships with brand partners to offer superior value for customers.

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. A notable dimension of the revenue performance is the quality of growth, which continues to be built around a balanced mix of healthy like for like sales from existing stores and bolstered by new customers acquired from a rapid expansion of stores across formats and geographies.

During the quarter, EBITDA was at Rs. 2,322 crores, growing at a solid 67% over same period of the previous year. EBITDA margin on net revenue improved by +150 bps Y-o-Y from 4.8% to 6.3% driven by improving store productivity, operating efficiencies and favorable portfolio mix. With growing scale, the operating leverage is providing the headroom for the business to continue making requisite investments to secure its future readiness, whilst delivering profitable growth alongside.

The business continues to seize the large market opportunity in the country through expanding its presence - covering the breadth of consumption baskets of grocery, consumer electronics and fashion and lifestyle across geographies. With 337 store openings in the quarter, the spread of 10,901 stores with an area of 24.5 million square feet (up +25% Y-o-Y) covers all corners of the country with the network reaching nearly 6,700 towns. The gains of modern retail are being brought to the real 'Bharat' as more than 2/3rd of stores are operated in Tier II, Tier III and Tier IV towns.

Reliance Retail's conviction in the larger macro and India retail opportunity is reflected in the rapid store expansion across all store concepts. During the quarter, Trends Small Town crossed 100 stores, within a year since its launch. Reliance Retail opened 200th SMART Store, having accelerated the pace of expansion with 100 stores being opened in the last 15 months itself. Reliance Retail continues to delight more and more children with the opening of the 100th Hamleys store in the country.

In Grocery, Reliance Retail's Fresh, SMART and Market stores witnessed strong growth backed by new store expansion and same store sales growth of 14%, driven by healthy volume growth across categories particularly in Fruits & Vegetables, Stapes and Dairy. A record 43 stores were opened during the quarter helping expand the reach to newer geographies. Almost half of the 200 SMART stores are in Tier 2 and smaller towns and have shown equally robust customer traction and sales throughput as the stores in Metro cities. Reliance Retail's grocery stores offers significant value proposition to the aspiring middle-class customers in India bringing them value added products and new age items like kiwi and dragon fruit, green tea, dark chocolates, olive oil etc., at significant value across all town classes. Reliance Retail has been a growth catalyst for many regional brands in developing innovative products, packaging designs and in expanding their markets. Reliance Retail received the Annapoorna Food Retailer of the Year Award 2019 conferred by Retailers Association of India (RAI) in association with Federation of Indian Chamber of Commerce and Industry (FICCI).

In Consumer Electronics, Reliance Digital continues to maintain its leadership position while registering same store sales growth of 12% in a challenging market environment. 100 new stores were opened during the quarter taking the count to over 8,200 stores. During the quarter, Reliance Retail entered into a long-term exclusive brand licensing arrangement with Kelvinator, an American home appliances brand. The arrangement grants Reliance Retail an exclusive manufacturing, marketing and distribution right in India for a range of consumer durable products. This marks another step towards addressing the large consumer durable opportunity in India and would strengthen Reliance Retail's product portfolio by bringing finest products to serve its customers.

Reliance Trends continues to pursue accelerated store opening with 76 new store additions in 2Q FY20 taking the total store count to over 775 stores with presence in over 400 cities. This is the fastest store expansion by any fashion retailer in India during the period. Reliance Trends continues to improve shopping experience for its customers and democratise fashion.

Reliance Retail received over 12 million footfalls, a growth of 13% Y-o-Y and more than 6.3 million transactions were done, a growth of 21% Y-o-Y during the Big Sale Period between 10th and 15th August period. Strong offers across wider assortment and deeper customer connect helped in drawing customers to shop at Reliance Retail stores during this period.

Reliance Retail continued to grow its presence through its partnerships during this period. JV with Marks & Spencer continued its pace of robust growth with 5 store additions taking the store count to 82 stores. Marks & Spencer Reliance JV was recognised among the top 75 'Best Workplaces for Women' in India and highest ranked retailer in 'India's Best Companies to Work For' as per Great Places To Work (GPTW) Institute. Reliance Brands continued to make more luxury brands available to the Indian consumers by expanding presence through various partner brands. During the period, Reliance Brands announced a JV with Tiffany & Co to bring the American luxury jewelry and specialty retailer to India and with WOMO | Bullfrog, the premium Italian men's cosmetics brand.

Overall, the results of Reliance Retail reflect a strategy that is on track and delivering, underpinned by sharp operational execution and a business model that keeps it well poised to deliver consistent, competitive and sustainable growth in the period ahead.

Shares of RELIANCE INDUSTRIES LTD. was last trading in BSE at Rs.1415.3 as compared to the previous close of Rs. 1396.15. The total number of shares traded during the day was 629451 in over 20580 trades.

The stock hit an intraday high of Rs. 1428 and intraday low of 1399.7. The net turnover during the day was Rs. 891730305.


Source: Equity Bulls

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