Services
FNO Stocks with CA Abhay
Option Trading with CA Abhay
Equity Trading with CA Abhay
Equity Investment with CA Abhay
Stock Market Masterclass
Reliance Retail slashes jobs, limits expansion to improve IPO valuation
Sandip Raj Gupta
06/Mar/2025
- Reliance Retail is cutting jobs, reducing marketing spend, and limiting physical store expansion to improve valuations before its IPO.
- The company’s valuation has reportedly fallen to $50 billion, nearly half of its peak valuation during the last fundraising round.
- Reliance Retail's Q3 FY25 net profit rose 10% YoY to ₹3,458 crore, with digital commerce contributing 18% of total revenue.
Reliance Retail Ventures Ltd (RRVL) is taking cost-cutting measures, including job reductions, limiting store expansion, and slashing marketing budgets, in a strategic effort to boost its valuation ahead of its anticipated initial public offering (IPO).
Reliance Retail’s Valuation Challenges
Reports suggest that Reliance Retail’s valuation has dropped to $50 billion, nearly half of the $100 billion valuation it commanded during its previous fundraising round two years ago. The lower valuation is seen as a setback for early investors, especially since talks of a buyback by marquee investors have not yielded favorable outcomes.
Cost-Cutting Measures Before IPO
To counter this, Reliance Retail is taking aggressive steps, including:
- Slashing jobs across different verticals to optimize costs.
- Reducing physical store expansion to focus on profitability.
- Cutting marketing budgets to streamline operational spending.
- Merging Reliance Brands Ltd with its core retail business, consolidating operations for better efficiency.
The company’s store count reached 19,102 in the third quarter of FY25, with footfalls growing 5% year-on-year to nearly 30 crore. However, reports indicate that the focus is now shifting to digital commerce and new commerce, which contributed 18% of total revenue in Q3 FY25.
Reliance Retail’s Q3 FY25 Financial Performance
Despite the valuation concerns, Reliance Retail posted a 10% increase in consolidated net profit in Q3 FY25:
- Net profit stood at ₹3,458 crore, up from ₹3,145 crore in Q3 FY24.
- Sequentially, net profit surged 22%, rising from ₹2,836 crore in Q2 FY25.
Reliance Industries Limited (RIL) Chairman and Managing Director Mukesh Ambani emphasized the company’s commitment to enhancing customer experiences through its wide-ranging retail offerings and digital commerce strategies.
Market Outlook & Jefferies’ Stance on Reliance Stock
Meanwhile, global brokerage Jefferies has maintained a ‘Buy’ call on Reliance Industries Ltd (RIL), setting a target price of ₹1,660 per share.
- Reliance’s stock has fallen over 25% from its peak last year, making investor sentiment cautious.
- The brokerage believes that the company’s focus on digital and new commerce, along with its restructuring efforts, could drive long-term growth.
As Reliance Retail prepares for its IPO, its focus on cost efficiency, digital expansion, and structural consolidation will be closely watched by investors. While the valuation dip raises concerns, the company’s strong revenue growth, profitability, and market dominance could still make its public listing one of the biggest IPOs in India’s retail sector.