Reliance Retail Q1 revenue rises, but profit falls as e-commerce weighs

India's largest retailer, Reliance Retail Ventures reported 14.2% year-on-year (yoy) drop in net profit at Rs 2806 crore in the first quarter ending June, while revenue from operations surged 8.2% yoy at Rs 79,745 crore with some impact on the growth due to demerger of the FMCG business last December.

Reliance Consumer Products (RCPL), which houses the group's FMCG business, more than doubled gross revenue to Rs 8,600 crore during the quarter, although it did not disclose EBITDA or profit.

Addressing analysts in the earnings announcement, the management said daily essentials under the Independence brand generated sales of Rs 3,200 crore during the quarter, while beverages led by Campa contributed Rs 2,900 crore.


On retail, Reliance said grocery, fashion and consumer electronics businesses posted double-digit underlying growth, but operating margins remained under pressure for the third straight quarter as the rising share of e-commerce sales and investments in digital infrastructure increased fixed costs.

Reliance Retail executive director Isha M. Ambani said the company delivered resilient performance in the first quarter with growth across the key consumption baskets. “Our continued investment in digital commerce underscores the transformative power of our digital platforms,” she said.

Reliance Retail’s gross revenue rose 7.4% to Rs 90,408 crore. Excluding the demerged FMCG business, gross revenue growth stood at 11.6%. EBITDA margin remained unchanged sequentially at 7.9%, compared with 8.7% in the year-ago quarter.

The management said retail margins are likely to remain under pressure over the next few quarters as Reliance continues to invest in expanding its e-commerce business, particularly quick commerce.

"Our three-year objective in retail is to double operating EBITDA through growth and better economics. We are building the foundation of our e-commerce business and are focused on quality, not just volumes. As the business matures, returns on capital and EBITDA will improve. If a market does not perform, we will pull back," Reliance Retail chief financial officer Dinesh Taluja told analysts.

The company opened 252 stores during the quarter, taking its network to 20,169 stores spanning 78.4 million sq ft.

On the FMCG business, RCPL executive director Ketan Mody said Campa will enter Australia this month and Africa next quarter. He also said Reliance has converted its beverage joint venture with Sosyo into a majority-owned subsidiary and is setting up an edible oil plant in West Bengal.

Reliance Retail's grocery e-commerce business, led by JioMart, recorded 116% YoY growth in average daily orders, with online sales accounting for 13.4% of consumer grocery revenue.

Consumer electronics revenue grew 16% YoY, aided by strong brand partnerships that ensured product availability despite global supply constraints.

The fashion business posted 4% revenue growth, driven by merchandise refresh and store upgrades. E-commerce accounted for 27% of apparel and footwear sales, up more than 490 basis points from a year earlier. Fashion quick-commerce platform Ajio Rush reported 136% quarter-on-quarter growth in orders, while the Shein app crossed 30 million downloads.