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Creditors Raise Concerns Over Hinduja's ₹7,300 Crore Debt Proposal for Reliance Capital

RIL's Q1FY25 Performance: Retail and Digital Drive Amid O2C Slump

RIL’s Q1FY25 Performance: Retail and Digital Drive Amid O2C Slump

About Stock:

Dhirubhai Ambaini started RIL in in 1966 as a small textile company which has now became a large company with holdings in petrochemicals, energy, natural gas, retail, telecommunications, energy, natural gas, retail, telecommunications, and digital services. RIL has continually pushed innovation and scaled operations to become a major power in a number of sectors under Mukesh Ambani’s direction. The biggest retailer in India, Reliance Retail Ventures Limited (RRVL), provides a wide range of goods online via JioMart, including food, gadgets, clothing, and more. With its reasonably priced 4G network, Jio Platforms has revolutionised the digital services industry in India and grown to become the country’s leading telecom operator.

Q1FY25 Performance Analysis:

Despite challenges in certain areas, Reliance Industries Limited (RIL) demonstrated solid overall performance in Q1FY25. The company’s consolidated sales reached INR 257,823 crore (approximately US $30,919 million), reflecting an 11.5% year-over-year (YoY) growth. This expansion was driven by strong contributions from key sectors, including oil and gas, retail, and digital services. However, the company’s Oil-to-Chemicals (O2C) division faced challenges due to lower refining margins and a decline in global demand.

EBITDA for the quarter increased by 2.0% YoY to INR 42,748 crore (US $5,126 million). While the O2C segment struggled, the robust performance of consumer-facing businesses, such as Retail and Digital Services, provided a counterbalance. A significant increase in production volumes from the KG-D6 block also contributed to the notable EBITDA improvement in the Oil & Gas segment.

On a quarter-over-quarter (QoQ) basis, EBITDA declined by 9.1%, primarily due to a 22% drop in O2C EBITDA, reflecting the challenging conditions in the global petrochemical and refining markets. This downturn in O2C performance also impacted the company’s profitability, with consolidated profit after tax (PAT) decreasing by 17.9% QoQ to INR 17,445 crore (US $2,092 million). Increased financing and depreciation charges further weighed on the bottom line.

Despite these challenges, RIL’s balance sheet remains strong, with a net debt reduction of INR 3,940 crore during the quarter, underscoring the company’s commitment to maintaining financial discipline and generating robust cash flows. RIL’s diversified business strategy has been key to its ability to capitalize on growth opportunities in consumer and digital sectors while navigating sector-specific obstacles.

Key Ratios:

Basic EPS (INR) 102.90
Cash EPS (INR) 191.35
Net Profit Margin (%) 8.72 %
ROE (%) 8.77 %
ROCE (%) 9.38 %
Total Debt/Equity 0.41
Asset Turnover Ratio (%) 0.54 %
Current Ratio 1.18
Quick Ratio 0.80
Dividend Payout Ratio (NP) (%) 8.74 %
EV/EBITDA 13.31

Segment Performance Analysis:

O2C Segment:
Reliance Industries’ O2C division faced significant challenges in Q1FY25. Revenue increased by 18.1% YoY to INR 157,133 crore (US $18,844 million), while EBITDA declined by 14.3% to INR 13,093 crore (US $1,570 million). The EBITDA decline was primarily due to lower refining margins, a sharp drop in prices for petrol (-30%), polypropylene (-17%), and the polyester chain (-15%), as well as weakened global demand. Despite these hurdles, the segment benefited from strong domestic demand, particularly in polyester and polymers, and from favorable feedstock economics, as ethane was used instead of naphtha.

Oil and Gas Segment:
The Oil and Gas division delivered exceptional performance, with revenue increasing by 33.4% YoY to INR 6,179 crore (approximately US $741 million) and EBITDA rising by 29.8% to INR 5,210 crore (around US $625 million). This impressive performance was largely driven by a 43.7% YoY increase in production volumes from the KG-D6 block, resulting in 69.4 BCFe. However, a 14.2% drop in gas price realization somewhat offset the segment’s EBITDA growth. Despite declining prices, higher production volumes continued to bolster the segment.

Retail Segment:
Reliance Retail maintained its strong growth trajectory, with EBITDA increasing by 10.5% to INR 5,664 crore (US $679 million) and revenue rising by 8.1% YoY to INR 75,615 crore (US $9,068 million). The segment saw robust sales in digital products, such as air conditioners, refrigerators, and televisions, alongside strong performance in food sales, driven by summer promotions. Additionally, the company expanded its registered customer base by 18% to 316 million and added 331 new locations, bringing its total retail footprint to 18,918 stores.

Digital Services Segment:
Jio Platforms led the strong growth in the Digital Services segment, with revenue increasing by 12.8% YoY to INR 34,548 crore (US $4,143 million) and EBITDA rising by 11.9% to INR 14,638 crore (US $1,755 million). The segment also benefited from a 32.8% YoY increase in data traffic, driven by growing 5G adoption and fiber-to-the-home (FTTH) penetration. Jio’s ability to maintain its industry-leading position, despite a competitive market, underscores the effectiveness of its customer-centric approach

 

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RIL Reports Strong Q2FY24 Performance Across Diverse Business Segments

RIL Reports Strong Q2FY24 Performance Across Diverse Business Segments

Company Overview:

Reliance Industries Ltd is a conglomerate engaged in multiple sectors, including Oil to Chemicals (O2C), Oil and Gas, and Retail, encompassing electronics, fashion & lifestyle, grocery, and beverages, as well as Digital services. Notably, within the Digital Business, Jio stands out, contributing a significant 85% to the overall 5G capacity and ranking as India’s top 5G network. In the retail sector, footfalls reached a remarkable 260 million, showing a 41% YoY increase, and 471 new stores were added, bringing the total count to 18,650 in Q2FY24.

Retail segment achieved record EBITDA, up 41% YoY, with 260 million footfalls and an 80 bps margin expansion in Q2

In Q2FY24, the Retail segment reported revenue of 77,163 Cr, a robust 18.8% YoY growth (+10.29% QoQ). This growth was primarily attributed to the strong performance in the grocery business, which experienced a 33% YoY increase. EBITDA reached 5,820 Cr, reflecting a strong 32.10% YoY growth, with contributions from grocery and fashion & lifestyle consumption. EBITDA margins expanded by 80 basis points YoY to 7.56%, driven by festive demand. Notably, the company added 2,033 new stores YoY, including 471 new stores in Q2FY24, bringing the total count to 18,650. Footfalls reached an impressive 260 million, marking a 41% YoY increase, and registered customers grew by 27% YoY, totaling 281 million.

Digital service Growth led by strong subscriber addition-32.1 Mn YoY (11.1 Mn in Q2) & growing 5G adoption

The Digital service business reported revenue of 32,657 Cr, reflecting a growth of 10.48% YoY (+1.81% QoQ). This growth was driven by a robust net subscriber addition of 32.1 million YoY and 11.1 million in Q2FY24. EBITDA increased by 14.48% YoY (2.55% QoQ) to 14,071 Cr, with EBITDA margins expanding by 150 basis points YoY to 43.09%. The Average Revenue Per User (ARPU) grew by 2.6% YoY, reaching 181.7 Rs, with a total of 459.7 million subscribers. The company also experienced substantial growth in data traffic, which increased by 28.5% YoY to 36.3 Exabytes, driven by the growing adoption of 5G and higher engagement on home STB. Notably, over 70 million subscribers migrated to 5G, and 8,000 towns were covered with true 5G.

Robust O2C EBITDA Growth supported by strong domestic demand and tight fuels market

In Q2FY24, minor improvement in asset quality with GS3/NS3 declining to 1bps/9bps QoQ to 4.29%/1.71% with amounting GS3/NS3 stood at 4,024 Cr/1,562 Cr. Stage 2 declined 60 bps QoQ to 5.7% this resulted in 30+ dpd improving 70 bps QoQ to 10% and current level of write-off stood at 351 Cr in Q2FY24. Provision coverage on stage-3 assets stood at 61.2% against 60.1% in previous quarter. CAR strongly stood at 18.70% in Q2FY24 which is above the RBI guidelines 15%.

KG D6 gas production added sharp improvement in oil and gas Business in Q2

In Q2FY24, the Oil and Gas business reported robust revenue of 6,620 Cr, showing a significant 71.8% YoY growth (+42.9% QoQ), primarily due to the strong production from the KG D6 block, reaching 68.3 MMSCMD, marking a 65.8% YoY increase compared to 19 MMSCMD in Q2FY24. The Oil and Gas segment reported an all-time high EBITDA, growing by 50.3% YoY (+18.7% QoQ) to 4,766 Cr, driven by higher volumes and an improvement in price realization on a YoY basis. However, EBITDA margins declined by 10.31% YoY (-14.69% QoQ) to 71.99% in Q2 due to costs related to MJ field commissioning and decommissioning of the Tapti field.

Valuation and Key Ratios:


Currently, the stock is trading at a multiple of 23x EPS (TTM) of 101 Rs, with a current market price of 2,320 Rs, and an industry price-to-earnings ratio of 11.1x. The company reports an ROE of 2.27% and ROA of 1.18% in Q2FY24. The interest coverage ratio stood at 5.63x in Q2FY24, indicating the company’s solvency, while the current ratio stood at 1.16x in Q2FY24.

Q2 FY24 Results Highlights: Consolidated

➡️ In Q2FY24, consolidated revenue grew by 1.08% YoY (+11.44% QoQ) to 2,31,886 Cr, primarily due to lower O2C revenues with a 14% decline in crude oil.

➡️ Consolidated EBITDA increased by 31.98% YoY (+7.55% QoQ) to 40,968 Cr, with solid growth across all operating segments. EBITDA margins were up by 400 basis points YoY to 17.67%, due to a decline in the cost of goods sold (COGS) by 4.03% YoY but maintained a 0.69% QoQ.

➡️ PAT surged by 28.15% YoY (+8.87% QoQ) to 19,878 Cr while PAT growth in consumer business tempered by higher depreciation with growth in asset and higher network utilisation. PAT margins expanded 180 bps YoY (stable on QoQ basis) to 8.57%

➡️ Interest cost grew 25.85% YoY (-1.82% QoQ) to 5,731 Cr with gross debt stood at $35,606 Mn and net debt at $14,176 Mn. Capex stood at 38,815 Cr primarily towards 5G roll-out and building retail ecosystem.

➡️ Earnings per share (EPS) for the quarter stood at 29.36 Rs, representing significant 28.15% YoY and 8.87% QoQ growth.

Conclusion:

Reliance Industries Ltd has demonstrated strong performance across its diversified business segments, with remarkable growth in Retail, Digital services, and Oil and Gas. The company’s robust financials and its focus on expanding its 5G network and retail presence position it favorably for future growth and sustainability.

 

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