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  3. Reliance Retail total debt up 73%; RRVL expected to continue pumping mo…

Reliance Retail total debt up 73%; RRVL expected to continue pumping money

9 Sept 2023

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Key Takeaways

  • The infusion of the capital in the form of debt will be leveraging the company as well as taking benefits of the tax implications over borrowed fund to increase profitability.

  • Reliance Retail Ltd’s expansion capital will be fulfilled, leading to efficient growth operations & increased profitability.

  • The infusion of the capital in the form of debt will be leveraging the company as well as taking benefits of the tax implications over borrowed fund to increase profitability.

  • Reliance Retail Ltd’s expansion capital will be fulfilled, leading to efficient growth operations & increased profitability.

Reliance Retail

Reliance Retail

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Expert Analysis

Reliance Retail Ltd (RRL) borrowed a Non-current long term loan worth Rs 32,303 crore from banks in the FY 2022-23, with debt-to-equity up from 1.35 in FY 22 to 1.91 in FY 23.

Justification

  • According to the experts, the expansion of the company is primarily funded through debt.

  • RRL also raised Rs 13,304 Cr in long-term debt from the holding company Reliance Retail Ventures Limited (RRVL) increasing its total debt up to 70,943 Cr as per the Annual report 2023.

  • The debt has been raised as Rs 11,459 Cr as short term and Rs 1,599 Cr as working capital.

  • The forecast is that the funding from the holding company(RRVL) to the subsidiary (RRL)  is likely to increase in the future

  • Reliance Industries raised Rs 8,278 crore by diluting a 0.99% stake in RRVL and is likely to dilute another 8-10%  over the next few months ahead of the proposed IPO of RRVL.

Publisher:Business Standard