Reliance Industries Q4 Results Review - Stronger O2C Offset Slowdown In Retail; Maintain Hold: Systematix

Systematix Research Report

Reliance Industries Ltd. Q4 FY24 Ebitda was in line with our forecast while better other income led to a 6.5% beat at profit after tax level. RIL reported a 5% QoQ (+11% YoY) growth at Ebitda led by a strong 19% rise in oil-to-chemical Ebitda, partially offset by 7% and 3% sequential drop in retail and upstream Ebitda.

O2C volume rose 4% QoQ to 17.1 million metric tonne while Ebitda/million tonne improved 15% owing to higher gross refining margin. Polymer delta saw a marginal improvement on a QoQ basis while polyester chain margin saw a flattish growth.

Number of store addition slowed down to a net 62 stores while total area increased 9% QoQ to 79.1 mn square feet. However, store rationalisation and seasonality impacted 8% revenue de-growth during Q4 FY24.

While Jio added 10.5 million subscriber base, average revenue per user remained flattish at Rs 181.7. On a positive side, capex runrate slowed down to Rs 232 billion versus Rs 301 billion in Q3 FY24 which led to a reduction in net debt to Rs 1.16 trillion from Rs 1.19 trillion.

Overall, we keep our Ebitda estimates largely unchanged while raise profit after tax estimates by 5.6%/12.6% for FY25E/FY26E owing to upward revision in other income on lower capex and lower interest cost.

We forecast Ebitda/profit after tax compound annual growth rate of 10.2%/12.2% during FY24-26E. Overall, we raise our SOTP-based target price to Rs 2,950 from earlier Rs 2,745 on increased multiple to its Jio business as we expect tariff hike post election would boost sentiments.

We maintain Hold on the stock.

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