Reliance Retail Unlisted Share

Company Overview:

India’s retail market is estimated at US$822 billion in FY 2019-20 and is expected to grow at a CAGR of 10% over the next five years to reach US$1,315 billion by FY 2024-25. The penetration of organised retail market is estimated at 11% in FY 2019- 20 and is expected to grow to 18% by FY 2024-25. The organised retail market is estimated at US$88 billion in FY 2019-20 and is expected to grow at a CAGR of 19% over the next five years to reach US$231 billion by FY 2024-25. The unorganised retail market is poised to grow to over US$1 trillion over this period, making it amongst the most attractive consumer sector opportunities across the world. 

Reliance retail was founded with a view to revolutionise retail in India. Today, it is the largest, fastest growing and most profitable retail company in India with diversified omni-channel presence through integrated store concepts and digital commerce platforms. It is the only Indian retailer to feature in ‘Global Powers of Retailing’. 

Company Mission:

• Provide millions of customers with unlimited choice, outstanding value proposition, superior quality and unmatched experience across the full spectrum of products and services 

• Serve the entire spectrum of Indian society i.e. from households, kiranas and merchants, to small and medium enterprises and institutions.

• Reach the length and breadth of the country through our physical and digital distribution platforms

• Be the partner of choice and enable win-win opportunities for our ecosystem across producers, small and medium enterprises, brand companies and global suppliers 

• Generate direct and indirect employment opportunities with skill transformation and talent development on an unprecedented scale

Reliance Retail has set up and continues to invest in building design and product development centres to offer relevant, contemporary and high quality products to meet the diverse needs of its customers. Reliance Retail’s sourcing ecosystem works with small producers and manufacturers (SMBs), regional, national and international brands. In particular, it supports small producers to modernise their operations, minimise inefficiencies and reduce leakages. The business is investing in building state-of-the-art supply chain infrastructure in India by linking all major sourcing locations through an automated, modular, reliable and scalable warehousing, logistics and last mile fulfilment ecosystem, Reliance Retail’s selling ecosystem comprises a vast network of stores and digital commerce platforms to serve customers across the length and breadth of the country The New Commerce model seeks to partner with millions of unorganised merchants through an inclusive model of growth while digitally enabling and empowering them, and offering them a compelling value proposition to grow their businesses and earnings. Together, it will serve millions of households and customers across the country. It provides employment to tens of thousands of people, bringing joy and pride to their families while enabling livelihoods for many others.

Business Segments:

1. Consumer Electronics:

Reliance Retail is India’s largest consumer electronics retailer with an extensive network of 8,600+ stores across 7,000+ towns. Consumer electronic purchase often necessitates a ‘touch and feel’ of the product and in many cases involves demonstration, installation, maintenance and after sales service. Reliance Retail operates differentiated store concepts that are centred around ‘Service’, ‘Solution’ and ‘Consumer Experience’ personalising technology for consumers. The stores house buying guides for discerning consumers simplifying product complexities. Guidance extended by expert store staff makes shopping journey easier for consumers. 

Competitive Strength:

• Personalised selling backed up by intuitive store designs and industry leading service levels

• Unmatched delivery proposition enabling delivery within 24 hours of purchase 

• ResQ for solutions encompassing end-to-end product life cycle requirements 

• Strong relationships with all the leading national and international brands 

• Exclusive brand licences and own brand products through Reconnect, JioPhone and LYF 

2. Fashion & Lifestyle:

It operates multiple specialty store concepts with an extensive portfolio of own and partner brands catering to all consumer segments through value, premium, bridge-to-luxury and luxury. Reliance Retail controls the entire fashion value chain through a vertically integrated operating model which generates fresh fashion across stores on a regular basis. 

Competitive Strength:

• Robust design and sourcing capabilities with Strong insights of diverse tastes and preferences across regions.

• Fastest growing store network over 100+ stores launched on an average every year for the last 14 years. 

• Strong own brand portfolio with own brands contribute >75% of Trends revenues and >60% of footwear revenues. 

• Partner of choice for global brands with Portfolio of over 45+ exclusive esteemed international brands. 

• Unrivalled integrated omni-channel play with 1,000+ stores catering to both instore and online orders.

3. Grocery:

Reliance Retail is India’s largest grocery retailer and operates multiple store concepts – from neighbourhood stores to destination supermarkets and JioMart. These concepts leverage engaging store experience, trained staff and attractive value proposition to address specific shopping needs of consumers. Reliance Retail has developed own brands that provide a wide range of quality offerings across various categories such as staples, food FMCG, home and personal care (HPC), and general merchandise. Over the years, Reliance Retail has made significant investments in developing an end-to-end value chain that is backwardly integrated for fresh foods which enables product quality, supply security and sourcing efficiencies. This has resulted in win-win partnerships with producers. Through its New Commerce initiative, Reliance Retail is linking producers with small merchants and consumers to create a win-win partnership model. The New Commerce footprint is being expanded from 33 cities at present, with investments in supply chain and technology, to make Reliance Retail a trusted partner for millions of merchants across the country. 

Competitive Strength:

• Robust value chain with Pan-India collection, processing and distribution centres.

• Omni-enabled network at scale with largest network of stores and digital commerce channels.

• Strong own brand portfolio with wide portfolio of own brands across staples, consumer products and general merchandise.

• Preferred retail partner for new brand launches, promotions, exclusive launches and activations.

• Hyperlocal digital strategy serving customers and merchant partners through unique fulfilment model.

• Rapid expansion with 600+ new stores rolled out.

• Launched and rapidly scaled JioMart, India’s largest hyperlocal platform. It continues to gain traction across regions with Tier II and Tier III cities contributing over half of the orders.

• Leveraged own supply chain network and worked closely with vendors and producers to ensure timely availability of products despite pandemic-led disruptions.

4. Pharmacy:

Reliance Retail forayed into pharmacy retail during FY 2020-21 through acquisition of Netmeds pharmacy digital platform. It aims to lead the category by pioneering an omnichannel pharma strategy encompassing physical stores, digital platform Netmeds.com, and partnerships with connected local pharmacies. This integrated and inclusive offering will enhance accessibility and affordability of medicines for Indian customers.

5. Jio:

Reliance Retail works as the master distributor for Jio connectivity services. The distribution network comprises of 8,200+ Jio stores and a vast network of retailers across the country for new customer acquisitions and recharges. Jio Stores provide customers best- in-class service of activations, recharges, devices availability and after sales service. In order to enhance seamless customer recharge and activation experience, the business has created a unique entrepreneur model by onboarding over 1.6 million Jio Associates who help customers to remain connected at all points in time. To keep friends and family safe, business is encouraging digitally savvy customers to recharge online on their own and stay home, stay safe and stay connected. Business has also enhanced the technology solution/architecture to improve recharge experience on its online partner platforms. 

Peer Comparison:

Financials: 

Source: Company Filing AOC-4

Source: Company Filing AOC-4

Source: Company Data

Key Ratios (Quarterly): 

Performance for the quarter 1Q FY23 

• Business witnessed its first quarter without any operating disruptions since the onset of COVID. 

• Consumer spending got a boost as families indulged in leisure activities, socializing, festivities and shopping as COVID situation improved though sentiments remained cautious due to inflationary concerns. 

• Footfalls recorded at 175 mn for the quarter, were 19% above pre-COVID levels as consumers returned to stores. 

• The increased footfalls and digital visits have translated into ~220 mn transactions in 1Q FY23, a growth of more than 60% over pre-COVID levels.

Valuations:

• Reliance Retail delivered a strong performance with its best-ever quarterly revenues in a macro environment that remained challenging. Gross Revenue was at ₹ 58,554 crore ($ 7.4 billion) for 1Q FY23, registering a growth of 51.9% Y-o-Y.

• The business posted an Operating EBITDA of ₹ 3,897 crore ($ 493 million), up 180.4% Y-o-Y with a 350-bps improvement in margin at 7.6% compared to 4.1% in the corresponding quarter of the previous year. This was led by higher contribution from Fashion & Lifestyle and Consumer Electronics and growing operating leverage with strong LFL growth over last year across consumption baskets.

• Net profit for the quarter was ₹ 2,061 crore ($ 261 million) higher by 114.2% Y-o-Y.

• Cash Profit for the quarter was ₹ 2,873 crore ($ 364 million) higher by 105.2% Y-o-Y.

• The registered customer base crossed a milestone of 200 million. The customer base stood at 208 million at the end of the quarter, up 29% Y-o-Y. 

• The business continues to seize the large market opportunity in the country through expanding its presence across geographies. With 792 store openings in the quarter, the spread of 15,866 stores with an area of 45.5 million sq ft covers all corners of the country.

• The business continues to bolster its supply chain capabilities with addition of 79 warehousing and fulfillment locations measuring 3.3 million sq ft of space added during the quarter.

• Even as stores return to normal operations, the digital commerce platforms continue to grow from strength to strength with Daily orders up 64% Y-o-Y.

• New Commerce operations sustains growth momentum as it continues to onboard merchants across new geographies and consumption baskets with its attractive value propositions as merchant base scale up 3x over last year. All operating metrices grew exponentially over last year reflecting growing trust of the merchant partners. 

• Digital and New Commerce grew >2x over last year and contributed about 19% of Gross Revenue.

• Reliance Retail continues to strengthen its capabilities across businesses through acquisitions and partnerships. It has signed a master franchise agreement with GAP Inc., a leading American Fashion brand, Tod’s, an Italian luxury lifestyle brand and Pret A Manger, a fresh food & organic coffee chain.

• In addition, Reliance Retail has acquired Catwalk, a leading women’s footwear brand and has acquired the India franchise rights for Sunglass Hut, a multi-brand premium eyewear retailer. The Company has also formed a Joint Venture with Plastic Legno SPA’s by acquiring a stake in the toy manufacturing business in India.

• Reliance Retail has added over 17,000 jobs during the quarter contributing positively to the social and financial well-being of all our employees and their families. The total employee count stands at ~3,79,000. 

Recent News:

1.) RELIANCE BRANDS LIMITED (RBL) has inked a long-term distribution agreement with Valentino to bring to India the most established Italian Maison de Couture. Through this long-term partnership, RELIANCE BRANDS LIMITED (RBL) will partner with Valentino to open its first boutique in Delhi, followed by a flagship store in Mumbai. The first store is due to open in 2022 by the end of the summer, with the flagship store in Mumbai to follow in the coming months. The stores will stock a complete range across womenswear, menswear, footwear, and accessories of the brand. The new long-term distribution deal will allow brand presence through a renewed store concept geared toward adapting to the changes in the retail market. Experiential design will provide customers with a global experience and a bespoke client experiential journey. 

“Valentino needs no introduction in India. Founded by the legendary Italian fashion designer Valentino Garavani and Giancarlo Giammetti, Valentino has gone through impactful creative evolution under the current Creative Director Pierpaolo Piccioli and CEO Jacopo Venturini heralding the brand into contemporary luxury while leveraging its heritage as the most established Italian Maison de Couture,” said Darshan Mehta, MD of Reliance Brands Limited. “The brand’s infectious romanticism, signature codes and bold use of colour has strong resonance in India. This partnership will help make the brand more accessible to its Indian customers and build a new tribe of Valentino connoisseurs.”

https://www.livemint.com/companies/news/reliance-brands-inks-long-term-deal-with-valentino-to-bring-maison-de-couture-in-india-11658406191705.html

2.) Reliance Industries (RIL) backed Reliance Retail Ventures Limited (RRVL) on Sunday announced the acquisition of 89% equity shares in Purple Panda Fashions that owns and operates the Clovia business. Reliance Retail will invest Rs950 crore via a combination of secondary stake purchase and primary investment.

https://www.livemint.com/companies/news/reliance-retail-acquires-majority-stake-in-purple-panda-fashions-clovia-with-rs-950-crore-investment-11647787774853.html

3.) The retail unit of Reliance Industry, Reliance Retail Ltd, has picked up a 54% stake in robotics company Adverb Technologies for $132 million, a senior company official said. This round of funding, a mix of primary and secondary capital, will accelerate the company’s expansion in Europe and US and enable it to set up a large robotic manufacturing facility. 

https://economictimes.indiatimes.com/tech/startups/reliance-industries-acquires-54-stake-in-robotics-firm-addverb-technologies/articleshow/88966660.cms