Reliance Industries Q3 Results Review - Inline; Downgrade The Stock To 'Hold': Systematix

Systematix Research Report

Reliance Industries Ltd. reported in-line results during Q3 FY24 where Ebitda was up 15% YoY (-1% QoQ) to Rs 407 billion largely led by upstream, retail and digital businesses while oil-to-chemical segment reported flattish growth.

Upstream’s Ebitda improved 50% QoQ to Rs 58 billion (+50% YoY) followed by retail at Rs 63 billion (+31% YoY). However, digital services Ebitda slightly disappointed with Rs 143 billion (+11% QoQ) as average revenue per user remained flattish QoQ at Rs 181.7.

Oil-to-chemical performance diminished to Rs 141 billion (1% YoY) as production meant for sale stood at 16.4 million metric tonne versus 17.1 mmt in Q2 FY24 due to planned maintenance during the quarter.

KG basin gas volume increased to 30 million metric standard cubic metre per day versus 19 mmscmd YoY. The company highlighted that core capex related to field operations was completed and all 19 wells in the three fields are in producing mode. The retail segment benefited from the revenue growth across categories (CE/ F&L/ grocery by 19%/28%/41% YoY respectively).

Capex has slowed down a bit to Rs 301 billion versus Rs 388 billion QoQ.

We have marginally increased our Ebitda estimates by 3.4%/2.9% for FY24E/FY25E based on strong results from Retail division and better gross refining margin environment.

We introduce FY26E financials and forecast FY23-FY26E Ebitda/PAT compound annual growth rate of 10.5%/5.3%. We roll over our target price to FY26E and raise it to Rs 2,745 from earlier Rs 2,550 and downgraded the stock to 'Hold' from earlier 'Buy'.

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