For Reliance Industries, Jio remains the jewel in the crown
₹38,765 crore. While this dip was largely anticipated, the real letdown came from its retail arm, Reliance Retail Ventures Ltd (RRVL), where growth momentum slowed significantly. RRVL’s revenue growth stood at 7% year-on-year in Q1, even as the average area operated in terms of square feet increased by 18%.
This implies that RRVL’s revenue per square foot dropped. In comparison, Avenue Supermarts Ltd, which operates the DMart supermarket chain, saw 18% year-on-year revenue growth in Q1 and an increase in revenue per square foot. RRVL’s store count of almost 19,000 stores is nearly 50x that of DMart.
However, in terms of total square feet under operation, RRVL is about five times DMart’s size, as the latter’s average store size is relatively larger. Given this context, the valuation assigned to RRVL compared to DMart appears steeply discounted, which seems unwarranted. Based on FY26 estimates, most brokerages have valued RRVL at an EV/EBITDA multiple of 30x-35x, whereas this figure for DMart stands at 50x.
EV stands for enterprise value. This suggests there is scope for an upside surprise in terms of RRVL’s relative valuation, but much depends on the revenue trajectory in the coming quarters. As such, the retail sector faces a new challenge—quick commerce.
Until recently, competition from quick commerce was dismissed as companies in the sector were making losses. However, Zomato Ltd’s Blinkit is on the verge of becoming profitable at the adjusted Ebitda level. In fact, Zepto, a leading player in quick commerce, has grown its revenue over five-fold to ₹10,000 crore in FY24 from about ₹2,000 crore in FY23.
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