Reliance Retail’s Q4 net profit grows 12.9% on the back of rapid expansion

Reliance Retail’s Q4 net profit grows 12.9% on the back of rapid expansion
Source: IANS
  • FY23 is a year of unprecedented growth of retail footprint for Reliance Retail as its store area grew over 50% Y-o-Y, the company said.
  • Due to store and warehouse additions, its depreciation for the quarter went up by 91% to ₹1,188 crore.
  • Reliance Retail’s finance costs for the quarter also shot up by 148% as the company continues to expand both digitally and physically.
Aided by growing footfalls, new store additions and high conversions, Reliance Retail posted a 12.9% growth in net profit to ₹2,415 crore in the fourth quarter of FY23, up from ₹2,139 crore a year ago. For the year ending FY23, its net profit grew 30% to ₹9,181 crore.

Its total revenue grew 19.4% in Q4 to ₹69,267 crore, up from ₹58,017 crore last year. On an annual basis, total revenue registered a 30% growth to ₹2.6 lakh crore, the company said late on Friday.

Earnings before interest, tax, depreciation and amortisation or EBITDA margin for FY23 was at 7.6%, up from by 140 basis points year-on-year (YoY) driven by a favourable mix, sourcing benefits and operating efficiencies, the company said. For the fourth quarter, its EBITDA margins went up 50 basis points YoY to 7.6%.

“Retail business registered excellent growth numbers backed by expansion of physical and digital footprint and a significant increase in footfall. We continue to expand our product base across consumption baskets,” said Mukesh Ambani, chairman and managing director of Reliance Industries.

Depreciation and finance costs swell

In FY23, the company opened over 3,300 stores, taking the total count to 18,040 stores covering a total area of 65.6 million sq. ft. The year reflects an unprecedented growth of retail footprint as the business has added 25 million sq ft store area representing more than 50% growth of retail space YoY, the company said in a press release.

However, as the business added more stores and warehousing space, depreciation went up by 91% to ₹1,188 crore during the fourth quarter, as compared to last year. Its finance costs also shot up by 148% as the company continues to expand both digitally and physically.

Reliance Retail’s customer base grew to 249 million, a growth of 29% YoY. The total transactions crossed a milestone of one billion, up 42% YoY. Stores recorded footfalls of over 780 million, which were up 50% YoY.

Many new ventures

The business added new retail formats in FY23 including Smart Bazaar, Azorte, Centro, Fashion Factory and Portico. For the year, digital and new commerce businesses contributed to 18% of its revenue.

“Reliance Retail continues on the path of registering industry-leading growth year after year at a scale unmatched in India. Our focus on customer-centricity backed by investments in technology, innovation and new business segments have helped us create operational excellence and steer the transformation of India’s retail sector,” said Isha M Ambani, executive director, Reliance Retail Ventures.

The business also made many strides in the last few months including the launch of several fast-moving consumer goods (FMCG) products under the brand name, Independence; and a range of soft soft drinks under the Campa brand.

The beauty business launched digital commerce platform ‘Tira’ and opened its flagship store in Mumbai. The company said that these businesses would be ramped up progressively in the coming period.