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Reliance Retail has come up with its annual report 2021 and same is available with UnlistedZone. Let us see how it has performed in the last one year.

About Reliance Retail

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 the list of ‘Global Powers of Retailing’.

As a market leader, Reliance Retail caters to five key consumption baskets –

1) Consumer Electronics 2) Fashion & Lifestyle 3) Grocery 4) Pharma Retail and 5) Connectivity.

Operation Analysis of Reliance Retail in FY20-21

1. Despite of spread of COVID-19 and lockdown imposed by government of India, Reliance Retail delivered a resilient performance last year. On a consolidated basis, Reliance Retail delivered revenue of 1,55,209 crore against 1,60,965 crore for the previous year.
2. The revenues were impacted on account of store closures (80% stores operational), lower footfalls (65% of last year) and operational disruptions through the year.
3. The Company delivered a consolidated EBITDA of  8,373 crore for FY 2020-21 against 9,518 crore for the previous year, driven by the gradual rebound of revenue streams and judicious cost management initiatives.
4. The Company has earned profit after tax of 4,587 crore against 5,540 crore for the previous year.

Business Analysis of Reliance Retail

1. The petro-retail dealership between Reliance Industries Limited (‘RIL’) and the Company’s subsidiary Reliance Petro Marketing Limited (‘RPML’) has ended. Consequently, the consolidated revenues of the Company have been impacted. RPML has continued to operate its bulk Lubricants business and packing and distribution of Liquefied Petroleum Gas business.
2. Reliance Retail has transferred its supply chain business to Reliance Retail Ventures Limited (‘RRVL’), its holding Company as a ‘going concern’ on ‘slump sale’ basis.
3. Reliance Retail business continued to attract and serve millions of customers across the country far and wide. The registered customer base now stands at 15 Crores, a growth of 25% Y-o-Y.
4. Reliance Retail business has been launched and rapidly scaled-up Jio-Mart and built last-mile fulfilment capacity a fresh to enable home delivery of essentials across 200 cities.
5. Jio-Mart has since grown to become India’s leading hyperlocal delivery platform with more users, more orders, and more products with each passing month.

Industry Trend in Retail Market

1. 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 next five years to reach US$1,315 billion by FY 2024-25.
2. 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.
3. 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.

Financial Performance of Reliance Retail

Figures in Crores

Year Revenue EBITDA OPM PAT NPM Equity EPS
2015 16169 854 5.3% 272 1.7% 4,989.54 0.55
2016 18418 932 5.1% 306 1.7% 4,989.54 0.61
2017 26473 1200 4.5% 440 1.7% 4,989.54 0.88
2018 51501 2411 4.7% 1246 2.4% 4,989.54 2.50
2019 102085 6064 5.9% 3140 3.07% 4,989.54 6.30
2020 130627 9405 7.19% 5526 4.2% 4,999.40 11.07
2021 131926 8312 6.3% 4586 3.4% 4,999.40 8.92

Valuation of Reliance Retail:

(i) Mcap – 13 Lakh Crores (at CMP of 2600).
(ii) EV – 13.14 Lakh Crores
(iii) EBITDA –  8312 Crores (Based on FY21 Financials)
(iv) EV/EBITDA – 158
(v) Mcap/Revenue – 10x

Peer Comparison:

Avenue Super Mart Snapshot (Figures in Crores)
Year Revenue EBITDA OPM PAT NPM Equity EPS
2015 6,457 477 7.40% 211 3.30% 561 4
2016 8,601 682 7.90% 320 3.70% 561 6
2017 11,926 1011 8.50% 478 4.00% 624 8
2018 15,102 1423 9.40% 806 5.30% 624 13
2019 20,052 1682 8.40% 902 4.50% 624 14
2020 24,930 2189 8.70% 1300 5.21% 647 20
2021 24143 1855 7% 1100 4.55% 648 17

Valuation of Avenue Super Mart:

(i) Mcap – 2.54 Lakh Crores (at CMP of 3921)
(ii) EV – 2.54 Lakh Crores
(iii) EBITDA – 1855 Crores (Based on FY21 Financials)
(iv) EV/EBITDA – 136
(v) Mcap/Revenue – 10x

Conclusion:

Valuation of Reliance Retail looks similar to its listed peer i.e. D-mart if we don’t consider any dilution of equity of Reliance Retail. However, with Reliance Retail focus on different segments like online medicine which is a high margin business and other businesses which Reliance is acquiring will definitely create value for shareholders in future.

 

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