Reliance Industries - Strong O2C, Giga Factories To Be Key Catalysts In FY25: Motilal Oswal

Motilal Oswal Report

Singapore refining margin remained robust at ~$8.3/barrel of oil in February 2024, while key petchem spreads over Naphtha too picked up month-on-month in Feb-24. FY25 will witness Reliance Industries Ltd. commence phase-wise operations from its passenger vehicle and battery storage facilities, which we believe can be a key catalyst for the stock in H1 FY25.

For Reliance Jio Infocomm Ltd., we build in a compound annual growth rate of 11%/15% in revenue/Ebitda over FY24-26, factoring in a 5%/4% CAGR for subs/average revenue per user over the same period.

The long-term outlook remains intact for RJio, aided by market share gains from Vodafone Idea Ltd., tariff hikes, new growth opportunities (such as Jiofiber, Airfiber, and JioBharat), and other digital avenues triggered by the 5G rollout.

Reliance Retail is expected to clock a CAGR of 24%/29% in revenue/Ebitda over FY24-26, led by accelerated store additions across segments, a recovery in store productivity, and an aggressive foray into digital and new commerce.

We maintain our 'Buy' rating on RIL, highlighting consistent strength in refining margins and ongoing improvements in petchem spreads for the O2C business.

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