Reliance Industries reported its Q1FY19 Results on Jul 27, 2018. As the street braced itself for strong performances in its petro-chemicals business and Reliance Jio, RIL’s retail division surprised with gigantic leaps.

Reliance Industries’ retail vertical houses the grocery stores including Reliance Fresh, Reliance Smart and Reliance Market.

It also comprises of Fashion & Lifestyle stores like Trends, Footprint, Jewels, AJIO and stores such as Reliance Digital & Jio Digital Life that specialize in selling Consumer Electronics. That’s not all. The organized retail vertical of Reliance also has the Fuel Retail (Petrol Pump) division, Connectivity (Jio Selling Points) and many exclusive brand partners such as Superdry, Muji, Brooks Brothers, Ermenegildo Zegna, Diesel, Gas, Hamleys etc which marks the Reliance Presence across all value chains and product verticals.

The Businesses

Reliance Industries has a reputation for achieving rapid growth, disruption & scale in all its new business ventures. After an unsuccessful foray in the retail business in the earlier part of the millennium, Reliance’s famed growth finally seems to have come. Between FY14 and FY18, Reliance Retail’s revenue has compounded at 37 percent.

Reliance Retail

Over the last 3 years, the introduction of Reliance Jio and inclusion of Jio Sim sales under organized retail have further boosted Reliance Retail’s Revenue and Operating Profit. Between FY16 and FY18, Reliance Retail’s Revenue has trebled and the operating profit has quadrupled.

Reliance Retail

Reliance Retail accelerated its retail revenue and EBIT in Q1FY19 as well. In the first quarter of the current fiscal, Reliance Retail revenue grew 124 percent and operating profit grew 266 percent. The company also expanded its retail space by 0.9 mn sq ft to an aggregate of 18.6 mn sq.ft. Total Stores as of Jun 30, 2018 Stand at 8533 which includes 4530 Jio points.

Number of Stores

Source: Company

Quarterly EBIT Trend

Source: Company

When compared to its peers, Reliance Retail’s turnover and retail reach stands head and shoulders above industry. For perspective, Reliance Retail reported Q1 revenue of Rs 25890 Cr which is roughly equivalent to the combined annual revenue of Future Retail, Future Lifestyle and Shoppers’ Stop.

Even if one adjusts for half of Reliance Retail’s reported revenue as Fuel Retail & Jio Sales, Reliance Retail’s core revenue of Rs 13000 crore in Q1FY19 almost as much as Aditya Birla Fashion, Trent and Shoppers’ Stop annual revenues put together.

In fact, even from a number of stores standpoint, Reliance Retail’s Rs 4000 crore outlets are as much as all outlets of Future Retail, Aditya Birla Fashion, Future Retail, Shoppers’ Stop, VMART and D-Mart stores combined.

RELIANCE RETAIL v/s PEERS

Source: Company, Brokerage Reports

The most important question however, is what value does one ascribe to Reliance Retail? A range of estimates by analysts on the basis of FY20 estimates suggest, Reliance Retail could be worth anywhere between $15-20 billion depending on the multiple one assigns to it.

Disclosure: RIL also controls Network18, the parent company of CNBCTV18.com.

First Published:Jul 31, 2018 7:00 AM IST