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Home / Companies / News /  Reliance Retail’s offline biz to grow at 16% CAGR over next 5 years: Jefferies

With more than 3,500 core retail stores, Reliance Retail, the largest retailer in the country and the only one with a multi category presence in electronics, fashion and grocery, is expected to grow its core offline revenue at 16% CAGR over the next five years, driven by growth in the fashion and grocery segments, said Jefferies in a note on Thursday.

“Within offline segments, fashion is likely to grow the fastest (24% CAGR), followed by grocery (19% CAGR) and electronics (11%). Non-core connectivity segment would mirror ramp-up in Jio's telecom services revenues, likely to grow at 18% CAGR," Jefferies said.

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It also projects Reliance Retail’s online business to grow.

“We also expect Reliance Retail to aggressively ramp-up its e-commerce business with B2C gross merchandise value of $15 billion and B2B gross merchandise value (GMV) of $3 billion by FY25. Put together, despite a blip in FY25, we forecast a revenue CAGR of 21% y-o-y over FY20-25E," it said in its note.

JioMart, Reliance Retail’s new commerce platform that plans to connect small stores to shoppers, was rolled out last year starting with groceries. Moreover, Reliance Retail also has an online presence in fashion, electronics, medicines, etc., with vertical e-commerce platforms such as Ajio.com (for fashion) and Reliance digital.com. Last year, it picked up a majority stake in online pharmacy company Netmeds.

Analysts at Jefferies said that “backed with the strong network of over 3,500 core stores and over 8,000 Jio points spread across the country, partnerships with WhatsApp and Facebook, digital synergies from the connectivity business, and upside from the potential acquisition of Future Group retail and supply chain assets (subject to legal and regulatory approvals), Reliance Retail is well-placed to scale-up its business-to-consumer new commerce business."

They estimate that Reliance Retail's online presence could help it capture 13-14% of the e-commerce market share by FY25.

Competition in India’s retail market has been heating up as top retailers try to grab a larger share of the organized retail trade here.

Moreover, with Reliance pushing its JioMart platform, the focus has also shifted from pure-play offline play to a mutli-channel format play with companies such as Amazon and Tata group in the fray.

However, Jefferies did flag concerns around the impending Future Group-Reliance Retail deal that faced fresh hurdles as the Delhi High Court restrained Future Group from going ahead with the deal.

“The Reliance Retail-Future Group deal is currently halted till the Supreme Court hearing. If there is an unfavourable verdict, there is a risk of these assets going to the competition and Reliance Retail losing a potential upside from the vast retail store network and supply-chain capabilities of Future Group," Jefferies added.

However, so far, the company’s diversified portfolio, spanning electronics, fashion and food and grocery across online and offline has helped the retailer cushion the impact of covid. “Reliance Retail is the only major retailer with a diversified category presence deriving 48% of core revenues from electronics, 37% from grocery and 15% from fashion. This spread also helped the company to cushion itself to some extent from the covid impact," it said.

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