RIL Q1 Results Review — New Energy To Be The Next Phase of Growth Driver, Says Systematix Maintaining 'Buy'

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Systematix Report

Reliance Industries Ltd.s Q1 FY26 revenue/adjusted Ebitda underwhelm our estimates by 1.1%/-3.5%, while net profit outperformed due to higher other income (even after adjusting to Asian Paints stake sale). Adj Ebitda came in at Rs 429 billion, up 10.7% YoY, led by strong growth reported from Digital services/Retail/O2C which rose 23%/13%/11% YoY.

PAT post adjusting for the one-off gains (~Rs 89 billion) came in at Rs 203 billion (up 34.1% YoY/4.6% QoQ) as other income increased 56% YoY (+26% QoQ).

Jio’s total customer base improved 1.7% YoY to 498 million (+9.9 million QoQ), 5G connection saw an addition of 20 million subscriber (210 million) while new homes connects increased by 2.6 million. Average revenue per user came in at Rs 208.8, up 14.9% YoY/1.3% QoQ.

Retail segment benefited with higher store count (net addition of 388 stores QOQ to 19,592 stores) and 13.3% increase in customer base to 358 million. Though, oil-to-chemical Ebitda was below estimates owing to expected lower polyester margin and lower volume due to planned shutdown.

In upstream, topline was negatively impacted by lower CBM gas price and KG-D6 volume partly offset by 21.7% YoY rise in CBM production volume. KG-D6 gas production was down 7% YoY/-1% QoQ to 26.6 mmscmd and condensate down 16% YoY/-2% QoQ to 19,300 bpd, while the realisation came in at $10/mmbtu (up 7.6% YoY/-1.2% QoQ).

In 2008, RIL had purchased about 4.9% stake (for ~Rs 5 billion) in Asian Paints, which they have fully exited and booked exceptional income of ~Rs 89 billion in Q1 FY26. CapEx declined 17% sequentially to Rs 299 billion.

We are marginally raising our Ebitda estimates by 2%/3% to factor in strong digital services profits while new Energy would start contributing from H2 FY26.

The company has guided to double its Ebitda by 2030. We forecast revenue/Ebitda/PAT CAGR of 7%/11.2%/10.4% over FY25-27E.

We raise our target price to Rs 1,680 (previously Rs 1,541) on the back of higher multiple to Jio due to strong earnings growth. Maintain Buy.

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