Reliance Industries Q1 Results Review - Oil-To-Chemical Drags Profit But Inline; Maintain Hold: Systematix

Systematix Research Report

Reliance Industries Ltd. reported a de-growth in earnings led by weaker oil-to-chemical business, but this was in line with our estimates. RIL’s Ebitda remained flattish YoY (-9% QoQ) to Rs 388 billion as O2C Ebitda was down 14% YoY on weaker refining margins, partially offset by 30%/10%/9% YoY rise in upstream/retail/Jio Ebitda to Rs 52/57/149 billion (-7%/-3%/+2% QoQ).

KG-D6 volume declined 4% QoQ to 28.7 million metric standard cubic metre per day while realisation also dipped 3% QoQ to $9.3/mmbtu. The pace of retail outlet expansion has also slowed down; added net 82 stores (gross +331) during the quarter. Total area increased 3% while revenue/sqft dipped 5% and Ebitda margin contracted to 8.2% from 8.4%.

New subscriber addition largely kept its pace with 8 million net addition while average revenue per user remained flattish at Rs 181.7 despite 8% higher per capita data consumption. Lower Ebitda coupled with higher interest cost and lower other income led to a 5%/20% YoY/QoQ decline in net profit to Rs 151 billion.

RIL’s capex rose 24% QoQ to Rs 288 billion while net debt marginally dropped to Rs 1.12 trillion (Rs 1.16 rilliotn QoQ).

We forecast weak petrochemical margins to continue while gross refining margin is expected to see some improvement. Further, tariff hike is expected to result in higher ARPU from the coming quarter.

We keep our estimates unchanged, and continue to forecast Ebitda/PAT CAGR of 10.2%/12.2% during FY24-26E. Maintain Hold with a SOTP-based Mar’26 target price of Rs 3,050.

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