RIL FY23 Results: Digital, New Commerce Ventures Contributed 18% To Reliance Retail’s Revenue

The digital and new commerce businesses contributed 18% to the total revenue of Reliance Retail, the retail arm of the oil-to-media conglomerate Reliance Industries Ltd (RIL), in the fiscal year ended March 2023. 

RIL released its results for the year and quarter ended March 2023 on Friday (April 21).

The company attributed the growth in the digital and new commerce businesses to the rapid expansion of its merchant base and new launches. The new commerce vertical saw its merchant count rise to well beyond 30 Lakh at the end of the fiscal year. 

“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 Ambani, executive director of Reliance Retail Ventures.

Overall, Reliance Retail saw its net profit surge 30% year-on-year (YoY) to INR 9,181 Cr in FY23, while revenue from operations rose nearly 32% YoY to INR 2.30 Lakh Cr. On a quarterly basis, net profit jumped 12.9% year-on-year (YoY) to INR 2,415 Cr in Q4 FY23. 

This was largely driven by broad-based growth across consumption baskets, new launches and the increased footfall at stores. 

Reliance Retail’s EBITDA (earnings before interest, taxes, depreciation, and amortisation) stood at INR 17,928 Cr in FY23 compared to INR 12,381 Cr in FY22. Meanwhile, the company said that the retail vertical saw increased depreciation on account of higher asset base due to addition of new stores and supply chain infrastructure. The subsidiary also bore high finance costs due to increased borrowing for business expansion.

The registered customer base of the retail arm rose 29% YoY to 24.9 Cr while total transaction count crossed the 100 Cr mark, up 42% on a yearly basis. Footfall at its stores also surged 50% YoY to 78 Cr in FY23. 

Reliance Retail continued its growth spree and added 2,844 new stores, taking the total count to 18,040. These stores were spread over a total area of 6.56 Cr sq. ft and had a footfall of 78 Cr in the entirety of FY23. It also scaled up investments in boosting supply chain infrastructure as 1.26 cr sq. ft. of warehouse space was added to its kitty in the period under review. 

A Quick Glance At Reliance Retail’s FY23 Financials:

• Reliance Retail recorded a gross revenue of INR 2.60 Lakh crore for FY23, a growth of 30% over the last year
• The vertical reported an EBITDA of INR 17,928 Cr, up 45% YoY while EBITDA margin on net sales stood at 7.6%
• Cash Profit for FY23 stood at INR 13,963 Cr, higher by 42%
• Number of transactions stood at 103.3 Cr while store footfall hovered around 78 cr mark
• Registered customer base soared to 24.9 Cr in FY23, up from 19.3 Cr in FY22

Uptick In Digital Businesses 

Growing on the back of wedding season, festive events and promotions, the fashion and lifestyle segment achieved a revenue growth of 19% YoY led largely by higher bill values and improved conversions. While AJIO’s catalogue size crossed the 13 Lakh mark, premium fashion brands saw a 35% growth YoY. The jewellery business logged a revenue growth of 28% on a yearly basis.

Overall, as per the company, JioMart delivered its best quarter in terms of revenue as catalogue size grew 34% QoQ across categories. In the non-grocery segment, JioMart strengthened its seller base by 56% QoQ while the pharma business showed a steady growth across channels and geographies. 

The conglomerate forayed into the epharamcy segment in 2020 with the acquisition of healthtech startup Netmeds. Back then, it acquired a 60% equity stake in Netmeds for INR 620 Cr.

Reliance Retail owns brands such as JioMart, AJIO, Trends, among others. Its consumer-facing retail businesses sell items from footwear to electronics and from apparel to grocery. 

Meanwhile, RIL said its media business continued to face headwinds from global macroeconomic pressures, a ‘weak revenue environment’, and decline in advertising budgets of startups.

Despite deploying a war chest to digitally broadcast major sports events such as FIFA World Cup and the IPL, the constrained ad budgets of consumer companies and startups due to high inflation and funding crunch, respectively, weighed heavily on media business. As a result, advertising revenue of the media vertical remained flat on a yearly basis. 

It must be noted that the ongoing funding winter has forced most Indian startups to cut corners and undertake restructuring exercises. Piling on that, macroeconomic headwinds such as inflation and apprehensions of a recession have forced startups and brands to slash their marketing costs to extend their runway.

Overall, RIL saw its net profit zoom 18.3% YoY to INR 21,327 Cr in the fiscal year ended March 2023 while gross revenue stood at INR 2.39 Lakh Cr. On similar lines, its telecom arm Reliance Jio reported a net profit of INR 19,124 Cr in FY23, up 23% from INR 15,487 Cr posted in FY22.

Jio added nearly 2.9 Cr users during the fiscal year while its average revenue per user (ARPU) rose to INR 178.8 per month in Q4 FY23 from INR 178.2 in Q3 FY23