Result Update Report for FY25Q1: Reliance Industries Ltd
1. About
Reliance Industries Limited (RIL) is one of India's largest conglomerates with diversified interests in Oil-to-Chemicals (O2C), Digital Services (Reliance Jio), Retail (Reliance Retail), and Oil & Gas Exploration and Production. RIL holds leading market positions in its core businesses, significantly contributing to India's economic growth and development.
2. Business
- Oil-to-Chemicals (O2C): Integrated refining and petrochemicals operations, producing a wide range of fuels and chemicals for domestic and international markets.
- Digital Services: Through Reliance Jio, RIL offers telecom and digital services, leading India's 5G rollout with over 130 million 5G subscribers.
- Retail: India's largest retailer with over 18,900 stores, covering sectors like grocery, consumer electronics, fashion, and lifestyle.
- Oil & Gas Exploration: Engaged in upstream exploration and production, notably in the KG-D6 basin, enhancing India's energy security.
3. Why We Like Reliance Industries
- Diversified Portfolio: Presence across high-growth sectors reduces risk and ensures multiple revenue streams.
- Market Leadership: Dominant positions in telecom, retail, and refining provide competitive advantages and economies of scale.
- Innovation and Expansion: Continuous investment in technology, 5G services, digital platforms, and expansion into new markets and products.
- Strong Financials: Consistent revenue growth, profitability, and a strong balance sheet support long-term sustainability.
4. Recent Updates
- Q1 FY25 Financial Performance: Consolidated revenue grew by 11.5% YoY to ₹2,58,000 crore; EBITDA increased by 2% YoY to ₹42,748 crore.
- Tariff Hike in Digital Services: Implemented after Q1 FY25, expected to positively impact ARPU and revenue in upcoming quarters.
- 5G Subscriber Growth: Reliance Jio reached approximately 130 million 5G subscribers, making it the largest 5G operator outside China.
- Retail Expansion: Added 331 new stores in Q1 FY25, with a focus on grocery and consumer electronics segments.
- Oil & Gas Production: KG-D6 production increased by 44% YoY, boosting the Oil & Gas segment's performance.
5. Financial Projections
| Metrics |
FY25
(Projected) |
FY26
(Projected) |
FY27
(Projected) |
| Revenue (₹ Crore) |
10,50,000 |
11,02,500 |
11,57,625 |
| EBITDA (₹ Crore) |
1,78,500 |
1,94,938 |
2,12,583 |
| OPM (%) |
17% |
17.7% |
18.4% |
| PAT (₹ Crore) |
73,500 |
81,150 |
89,265 |
| EPS (₹) |
116 |
128 |
141 |
| P/E |
18x |
16x |
15x |
| RoCE (%) |
9% |
10% |
11% |
| ROE (%) |
8% |
9% |
10% |
6. Assumptions for Projections
- Revenue Growth: Estimated annual growth of approximately 5% based on management's guidance and expansion plans.
- EBITDA Margin Improvement: Gradual increase due to operational efficiencies and higher contributions from consumer businesses.
- PAT Growth: Reflects improved profitability from tariff hikes and increased production in Oil & Gas.
- EPS Calculation: Based on current number of shares outstanding; assumes no significant change in share capital.
- P/E Ratio: Assumes stable stock price with slight improvement in earnings, leading to a decreasing P/E over time.
- Return Ratios: RoCE and ROE expected to improve with better asset utilization and profitability.