Reliance Industries Q2: Telecom and Retail Sectors Fuel Strong Growth

Overview
Mukesh Ambani, a billionaire and India’s richest person, leads Reliance Industries, the country’s largest firm by market capitalization. However, RIL is not the only company led by Ambani that is listed on the stock exchange. Reliance Industrial Infrastructure Limited, a RIL-promoted firm, has declared its quarterly earnings for the October-December 2024 period.

Price History of RIIL
On Wednesday, shares of the Reliance Industries-backed company closed at Rs 1113 per on the BSE, down 2%. RIIL, with a market capitalization of Rs 1,680.63 crore, is a component of the S&P Smallcap Index. Reliance Industrial Infrastructure shares have fallen 20% in the last six months and 17% over the last year.
According to BSE statistics, the Reliance stock has increased by 22 percent in the last two years and 29.53 percent in the last three years and consequently, the shares of RIIL have surged by 142& in the last 5 years. Meanwhile, Ambani-led Reliance Industries is a promoter in the company, with 68,60,064 shares representing a 45.43 percent ownership.

Bernstein Report
Reliance Industries Limited will experience a recovery cycle following a bad year in 2024, according to Bernstein analysis. According to this analysis, RIL’s near-term growth drivers will include telecom, retail, and refining. In 2025, the recovery will be spearheaded by a 12% increase in Jio’s Average Revenue Per User (ARPU) without rate increases, as well as 4-5% user growth. Retail operations are also expected to improve, with double-digit EBITDA growth, providing strength to the RIL.

The research notes that the company’s current valuation of 10.1x projected EV/EBITDA is 17% lower than its three-year average. With earnings likely to climb by 19% or higher in FY26, Bernstein has upped its target price for RIL to Rs 1,520, representing a 25% upside.
According to the analysis, Reliance Jio would be a primary driver of RIL’s recovery, with revenue growth forecast at a CAGR of 17% over the next three years.

By FY26, ARPU is forecast to increase by more than 14%, and Jio’s subscriber base is expected to reach 500 million, resulting in a 48% revenue market share.
According to the study, Jio’s lower capital investment is further bolstering its profitability, which benefits RIL. According to the research, RIL’s retail business is expected to rebound from the setbacks suffered last year following the shop rationalisation. It expects a return to 15% growth by FY26, aided by normalized capital spending and higher revenue per square foot.

According to the research, the refining business, which was under pressure from dropping GRMs in FY24, has begun to reverse its trajectory. GRMs are predicted to rise by 5.4% year on year in FY26, helped by a weaker Indian rupee.
The corporation will gain from its new investments in the energy sector, which include solar and storage capacity. RIL intends to use 20 GW of panel production for internal consumption and manufacture green H2 in 2025, with a goal of reaching 50 Wh of cell-to-pack battery manufacturing by 2027.The Reliance gigacomplex will be the largest end-to-end renewable energy manufacturing facility.

According to the study, Reliance plans to create a battery gigafactory by 2026 and to accelerate sodium iron technology to a megawatt level by 2025. RIL inked its first 25-year PPA for 128MW and an MOU with the Maharashtra government for 100kTPA GH2 production (an investment of USD1.8 billion), which will help the business in public markets, according to the report.

Bernstein values RIL using a sum-of-the-parts approach, taking into account growth in its core segments. Jio’s telecom section is valued at 12x projected EV/EBITDA, while the retail segment is evaluated based on core and non-core operations. Refining and petrochemical segments are valued at 7 times FY26 EV/EBITDA. Bernstein emphasized RIL’s potential to generate substantial free cash flow and offer solid returns for investors, citing a steady-state EBITDA of USD 22 billion expected for FY25-27.

Q3 Results Date
The Ambani-led firm’s Board of Directors will meet next week on January 15, 2025, to accept un-audited standalone and consolidated financial reports for the quarter/nine months ended December 31, 2024. RIIL said last month that the Trading Window closing period will begin on January 1, 2025 and expire 48 hours after the Company’s financial statements for the third quarter ended December 31, 2024 become Generally Available Information.

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