Reliance Industries Setting The Stage For Multi-Decadal Value Creation, Says Motilal Oswal Maintaining 'Buy'

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Motilal Oswal Report

Our earnings estimates are unchanged. We expect Reliance Jio to remain the biggest growth driver with 19% Ebitda CAGR over FY25-28, driven by one more tariff hike, market share gains in wireless, and continued ramp-up of the Homes and Enterprise offerings.

Given the recent rationalisation, a low base, and a scale-up of quick deliveries on JioMart and AJio, we expect growth to recover sharply in Reliance Retail Ventrues and build in ~14-15% CAGR in revenue and Ebitda over FY25-28.

After a subdued FY25, we expect earnings to recover in the oil-to-chemical segment, driven by an improvement in refining margins. However, our FY28E consolidated Ebitda for O2C and E&P is ~4% lower than FY24 levels.

Overall, we build in a CAGR of ~11% in consolidated Ebitda and PAT over FY25- 28, driven by a double-digit Ebitda CAGR in RJio and Reliance Retail and O2C recovery.

We model an annual consolidated capex of Rs 1.3 trillion for Reliance Industries Ltd. over FY25-28E, as the moderation in RJio capex is likely to be offset by higher capex in New Energy forays. However, we believe the peak of capex is behind, which should lead to healthy free cash flow generation (~Rs 1 trillion over FY25-28E) and a decline in consolidated net debt.

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