Reliance Industries Q2 Review - Weaker Oil-To-Chemical, Retail Dragged Ebitda; Upgrade To Buy: Systematix

Systematix Report

Reliance Industries Ltd.’s Q2 FY25 Ebitda was in-line with our expectations while higher other income led to a 9% beat at net profit. Weaker oil-to-chemical profit was offset by higher telecom and upstream profits.

RIL reported a 5% YoY (+1% QoQ) decline in Ebitda, while net profit was down by 5% YoY to Rs 166 billion. Outward sales volume increased 4% YoY to 17.7 million metric tonne while Ebitda/mt declined 27% YoY to $84/mt.

Retail business is witnessing a downward trend owing to slower net addition of stores and lower contribution from digital and new commerce. Retail’s core margin improved 40 bps YoY/31bps QoQ to 8.5% which led to a 3.3% QoQ (+0.5% YoY) growth in core Ebitda to Rs 58.6 billion.

The total subscriber base was down by 10.9 million QoQ (+19.1 million YoY) to 479 million while the tariff hike led to a 7% QoQ/7% YoY rise in average revenue per user to Rs 195.1 (our estimate Rs 191). Overall, Ebitda increased 15%/8% YoY/QoQ to Rs 161 billion.

Total capex increased sequentially to Rs 340 billion in Q2 FY25 from Rs 288 billion (Rs 388 billion YoY) largely towards new energy and O2C while capex for digital services and retail business has come down sharply. Total net debt remained at an elevated level at Rs 1.16 trillion versus Rs 1.12 trillion QoQ.

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