Buy Reliance Industries Ltd for the Target Rs. 1,668 By Prabhudas Liladhar Capital Ltd
Consolidated EBITDA/PAT in-line, strong digital & retail growth
Quick Pointers:
* Standalone EBITDA/mt +11%/14% QoQ/YoY at USD49.1, products for sale 5% QoQ
* New Energy project commercialization remains on track
Reliance Industries’ (RIL) conso EBITDA came in at Rs458.9bn (PLe: Rs439.5bn, BBGe: Rs444.8bn, +7%/+17% QoQ/YoY) with Adj. PAT of Rs182bn (+1%/10% QoQ/YoY; PLe: Rs187.4bn, BBGe: Rs200.2bn). Standalone EBITDA at Rs143.9bn (PLe: Rs151.6bn; +9%/+7.2% QoQ/YoY) was driven by sharp recovery in fuel cracks (+22-37%), growth in polymer deltas – PE/PP/PVC (+6%/+8%/+5%), partly offset by decline in polyester chain cracks (-9%) and natural decline in KGD6 volumes. Retail EBITDA grew +7%/+17% QoQ/YoY, to Rs66.2bn. Jio ARPU grew +1%/+8% QoQ/YoY to Rs211.4 on the back of earlier tariff hike, with a subscriber addition of 8.3mn to 506.4mn. JPL conso EBITDA stood at Rs187bn, +18% YoY. The stock is trading at 9.9/8.9x conso. FY27/28E EV/EBITDA. New energy projects remain on track with commissioning of 4 PV module lines; 1st cell line to be commissioned in few weeks (Oct’25). In absence of any quantitative details, we value Rs111/share for this segment valuing it at 2x the earlier announced capex of Rs750bn. We maintain a BUY rating, driven by potential upside in the new energy segment and strong momentum in digital and retail businesses with an upgraded target price of Rs1,668 (previously Rs1,609).
Retail: Reliance Retail’s net revenues came in at Rs791bn, +19%YoY. EBITDA stood at Rs66.2bn, up 17% YoY with an EBITDA margin of 8.4% (-10bps/+20bps YoY/QoQ). PAT came in at Rs34.4bn, +17% YoY. Total store count stands at 19,821, with 412 new store openings and an area of 77.8mn sq ft. (flat/-2% QoQ/YOY).
Digital Services: Jio Platforms Ltd reported a net revenue of Rs363.3bn, up +15% YoY and +4% QoQ. EBITDA came in at Rs187.6bn, +18% YoY and +3% QoQ. EBITDA margins expanded by 140bps YoY. PAT stood at Rs73.75bn, +13% YoY and +4% QoQ. Subscriber addition stood at 8.3mn with subscriber base at 506.4mn (+6%/+2% YoY/QoQ) while ARPU grew from Rs208.8 to Rs211.4 QoQ. 5G subscribers grew QoQ to 234mn vs. 210mn with 21mn addition during the quarter.
Standalone segment: RIL’s standalone EBITDA came in -5% below our estimates (PLe: Rs151.6bn) at Rs143.9bn, although it improved +7.2% YoY, +9.3% QoQ, driven by sharp recovery in fuel cracks +22-37% YoY, polymer cracks - PE (+6%), PP (+8%), PVC (+5%) YoY, strong volume growth of 34% YoY in Jio-bp. This was partly offset by natural decline in KGD6 volume and weak polyester chain cracks (-9%). Average Brent Crude prices fell ~14% YoY to USD69.1/bbl. Implied EBITDA/mt stood at USD49.1 vs USD44.1 in Q1FY26 and USD43.2 in Q2FY25.
New Energy: Ongoing projects in the New Energy segment remain on track to achieve the targeted capacity. Reliance has commissioned 4 PV module lines, and the 1st cell line is expected to be commissioned soon.
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