Reliance Industries - RJio Initiates ~20% Tariff Hike; Boost To The Telecom Sector: Motilal Oswal

Motilal Oswal Report

We expect Reliance Industries Ltd.'s 20% tariff hike would increase average revenue per user by 15% (Rs 206 ARPU in FY25E) since the prices are not increase for all plans.  As a result, we raise our revenue/Ebitda estimates by 11/17% in FY25/FY26.

We expect Ebitda of Rs 701 billion/Rs 798 billion. We factor in a CAGR of 17%/23% in revenue/Ebitda during FY24-26.

RJio is d at an enterprise /Ebitda multiple of 12 times on FY26E Ebitda, thereby arriving at a valuation of Rs 840/share, adjusted for its 66% stake (versus Rs 810/share previously).

Based on SoTP, we the Refining and Petrochemical segment at eight times FY26E EV/Ebitda to arrive at a valuation of Rs 1,029/share for the standalone business.

We ascribe an equity valuation of Rs 840/share to RJio, Rs 1,593/share to Reliance Retail and Rs 37/share to the new energy business. Consequently, we reiterate our Buy rating on RIL with a target price of Rs 3,275.

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