PL Stock Report: Reliance Industries (RELIANCE IN) - Q2FY24 Result Update – Operationally strong results - BUY

Reliance Industries (RELIANCE IN) - Swarnendu Bhushan - Co-Head of Research, Prabhudas Lilladher Pvt Ltd.

Rating: BUY | CMP: Rs2,266 | TP: Rs2,618

Q2FY24 Result Update – Operationally strong results

Quick Pointers:

§ Standalone implied EBITDA/mt stood at US$78.4/mt, up 9% QoQ, 49% YoY.

§ Net subscribers’ addition at 11mn, digital services EBITDA grew 8% QoQ and 12.6% YoY.

Reliance Industries’ (RIL) consolidated revenue grew 12% QoQ to Rs 2,319 bn (PLe: Rs 2,371 bn). EBITDA rose 8% QoQ to Rs 409.7 bn (PLe: Rs 436.6 bn) while PAT grew 9% QoQ to Rs 173.9 bn (PLe: Rs194.2 bn). Retail EBITDA grew 32% YoY led by grocery and fashion/lifestyle. O2C EBITDA grew sharply by 63% YoY led by strong petrol and PVC margins, optimized feedstock sourcing and lower SAED. ARPU stood at Rs 181.7 while total subscribers stand at 459.7mn. The stock is currently trading at 11.4x EV/EBITDA. We maintain BUY rating with a TP of Rs 2618, based on SoTP valuing the standalone business at 7.5x FY26 EV/EBITDA), Jio at 15x FY26 EV/EBITDA and Retail at 37x FY26 EV/EBITDA

Retail: Reliance Retail’s revenue came in at Rs771.5 bn, up10% QoQ, 19% YoY led by growth across consumption baskets. EBITDA stood at Rs 58.2 bn, up 13.3% QoQ and 32.2% YoY. YoY EBITDA growth was led by grocery and fashion/lifestyle segment. Footfalls grew 4.4 % QoQ and 41% YoY. A total of 471 new stores were opened taking the total count to 18,650 stores with an area of 71.5 mn sq ft.

Digital Services: Jio Platforms Ltd reported a revenue of Rs 269 bn, up 12% QoQ and 10.7% YoY. YoY growth was led by subscriber growth. EBITDA came in at Rs 135.2 bn, up 8% QoQ and 12.6% YoY while depreciation increased 5% QoQ and 17.1% YoY to Rs54.2 bn due to higher network utilization and incremental addition to gross block. PAT stood at Rs 53 bn, up 9% QoQ and 12% YoY.

Standalone O2C: RIL’s standalone EBITDA came in at Rs 192 bn, up 10% QoQ, 63% YoY. QoQ improvement in EBITDA was led by higher transportation fuel cracks and sharp recovery in PVC delta. PAT stood at Rs 112.1 bn, up16% QoQ. O2C EBITDA for the quarter was Rs 140 bn, up 7% QoQ while Oil and Gas segment’s EBITDA at Rs48bn was up 18% QoQ primarily due to higher sales volume. Total production for sale stood at 17.1 mmt while throughput for the quarter was 20 mmt.

Consol H1FY24: Consolidated revenue for H1FY24 stood at Rs 4,395 bn, down 2% YoY. EBITDA for the period was Rs 790.6 bn, up 14% YoY and PAT came in at Rs 334 bn, up 6% YoY. Net consolidated debt stands at Rs1,177bn vs Rs1,258bn in Mar’23. The company completed a capital raise of Rs103bn in RRVL from QIA & KKR, and a further raise of Rs50b from ADIA in RRVL. Capex incurred for Q2FY24 is Rs3,882bn.

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