Buy Reliance Industries Ltd For Target Rs. 1,675 by Prabhudas Liladhar Capital Ltd
Consol EBITDA/PAT beat est; SA outperforms
Consol. EBITDA came in at INR475.2bn, ahead of estimates (PLe INR441.7bn; BBGe INR463.8bn). Adj. PAT rose 23.4% QoQ to INR209.5bn (PLe INR145.7bn; BBGe INR204.5bn). Standalone EBITDA surged 48.3% YoY and 63.2% QoQ to INR195.6bn, driven by stronger transportation fuel cracks, downstream margins and crude basket optimization. Retail performance remained subdued, with EBITDA from ops declining 1.8% YoY and 11.3% QoQ, although management aims to target doubling operating EBITDA over the next three years through scale expansion in FY27 and monetization in FY28-29. Jio ARPU remained stable QoQ at INR215.6, supported by healthy subscriber additions of 8.9mn. In New Energy, installation at the Kutch renewable energy project is set to commence post-monsoon, with exports commencing this year. Maintain BUY with a revised TP of INR1,675 (earlier INR1,650), supported by resilient Standalone performance and sustained momentum in Digital business. We also add the value of INR111/share for the New Energy business (2x announced capex of INR750bn).
Retail:
Gross revenue grew 7.4% YoY; (11.6% YoY Adj. for demerger of RCPL). Reported net revenue rose 8.2% YoY to INR797.4bn. EBITDA from operations declined 1.8% YoY and 11.3% QoQ to INR59.3bn, with EBITDA margin contracting 75.6bps YoY and 21.7bps QoQ to 7.4%. RIL aims to double operating EBITDA over the next 3 years through JioMart expansion, omni-channel scaling, dark store additions, and operating leverage.
Digital Services:
RJIL net revenue grew 10.8% YoY & 2.5% QoQ to INR342.1bn in Q1FY27. EBITDA grew 12.1% YoY and 3.3% QoQ to INR187.1bn, with EBITDA margin expanding 50bps YoY to 54.7%. Subs additions stood at 8.9mn, while ARPU remained flat QoQ at INR215.6. Monthly churn improved to 1.6%. JPL net revenue grew 11.8% YoY to INR391.7bn, while EBITDA increased 15.1% YoY to INR208.7bn.
Standalone segment:
O2C EBITDA surged 48.3% YoY and 63.2% QoQ to INR195.3bn in Q1FY27, led by higher transportation fuel cracks, stronger downstream margins, favorable ethane cracking economics, and crude basket optimization. Oil & Gas EBITDA declined marginally by 0.5% YoY to INR49.7bn.
New Energy:
Kutch energy project is progressing as planned, with installation expected to begin post-monsoon. The first phase of the 40GWh battery manufacturing facility is scheduled to commission this year, with long-term plans to scale capacity to 120GWh.
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