Reliance Retail profit falls 14% as digital push hits margins
Reliance Retail's first-quarter profit fell 14% as heavy infrastructure spending to scale quick-commerce operations compressed margins, but the company outlined a three-year roadmap to double operating earnings.
Reliance Retail posted a net profit of Rs 2,806 crore for the first quarter of fiscal 2027, down 14% year-on-year. Revenue rose 7% overall, or 11.6% when adjusted for the demerger of its Consumer Brands business. The earnings decline came as the EBITDA margin contracted 80 basis points to 7.9%, driven by fixed costs tied to digital commerce infrastructure.
The company is absorbing heavy upfront costs to scale its quick-commerce capabilities. Average daily orders for grocery digital commerce surged 116% compared to the same period last year. Digital channels now account for 13.4% of grocery B2C revenue, an increase of 160 basis points year-on-year.
JioMart currently services around 5,500 pin codes and has connected more than 2,500 digital and fashion stores to a two-hour delivery network. The retailer is simultaneously expanding its physical footprint, opening 252 stores during the quarter to reach a total of 20,169 locations spanning 78.4 million square feet.
For investors, the immediate pressure on margins is a calculated trade-off for future market share. Management indicated it is no longer prioritising gross order volumes alone, shifting focus to repeat customers, order density, delivery cost efficiency, and contribution margins. The active seller base on its marketplace grew 26% year-on-year.
The company has set a three-year objective to double its operating EBITDA through a combination of top-line growth and improved unit economics. The current fiscal year is earmarked for expanding dark stores and proving the profitability model across individual markets. Management expects this foundation to convert into higher EBITDA and cash generation in fiscal years 2028 and 2029.
"Reliance Retail delivered resilient performance in Q1 FY27, with growth across the key consumption baskets. Our continued investment in digital commerce underscores the transformative power of our digital platforms. Our expanding customer base, widest store network, and growing omni-channel capabilities position us well to continue fulfilling every need, every dream, for every Indian, every day," Executive Director Isha Ambani said. The subsequent years of the plan rely on expanding own brands and marketplace monetisation to sustain margin growth.
