RIL Shares:
Jefferies said Q4 numbers for O2C and Reliance Jio were ahead of its estimates but retail segment missed estimates. It said Reliance Retail’s growth was soft but balance sheet improved, aided by capital raise, asset divestiture.
Jefferies stated on Tuesday that Reliance Industries Ltd is poised for a 14% Ebitda growth in FY25, primarily driven by Jio’s significant contribution resulting from tariff increases. The foreign brokerage has raised its revenue and Ebitda projections for Reliance Jio by 1-4%, advocating a valuation multiple of 11.5 times EV/Ebitda, aligning with Bharti Airtel Ltd’s valuations.
Reliance Industries announced on Monday that its pre-tax profit reached the milestone of Rs 1 lakh crore in FY24, marking a historic achievement as the first Indian company to do so. Furthermore, Jio Platforms achieved an annual profit exceeding Rs 20,000 crore, while Reliance Retail’s annual profit surpassed the Rs 10,000 crore mark, as highlighted by the company.
For the March quarter, O2C and Reliance Jio outperformed Jefferies’ estimates, but the retail segment fell short. Jefferies noted that Reliance Retail’s growth was subdued, yet the balance sheet showed improvement, with a decrease in net debt attributed to capital raising and asset divestitures.
According to Jefferies, Jio’s performance surpassed expectations, driven by increased ARPUs resulting from a better subscriber mix. The profitability of O2C improved significantly due to strong refilling, although petrochemicals remained subdued. Furthermore, it was noted that peak capital expenditure seems to be behind, leading to improved free cash flow (FCF) and a 6% year-on-year decrease in net debt.
The foreign brokerage revised its FY25 Ebitda estimate upward by 3%, and FY26 by 1%. It upheld a Buy rating on RIL with a target of Rs 3,380. Regarding Reliance Jio, the brokerage noted increasing traction in 5G and emphasized Jio’s focus on expanding its 5G and home business in FY25. Additionally, it increased its equity valuation for the business to $94 billion.
Regarding the retail business, Jefferies highlighted an improvement in the balance sheet, with a reduction in net debt attributed in part to capital raising and the sale of warehousing assets. Jefferies noted that Reliance Retail made difficult decisions as FY24 witnessed a significant number of store closures. The brokerage values the retail business at $109 billion.
For O2C business, Jefferies sees 5 per cent growth dragged by petchem business
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