RIL Q3 Results Review: Rebound In Retail Sales, New Energy Business To Drive Growth
Reliance Industries' foray in the new energy business will equal the oil-to-chemical segments profits in five–seven years, says Nuvama.
Reliance Industries Ltd.'s rebound in retail sales in the third quarter of the current financial year along with net subscriber additions for Jio Infocomm and a strong outlook on new energy business provide a strong earnings-growth visibility in the near future, according to analysts who are overweight and maintain a 'buy' rating on the stock.
On long-term growth visibility, brokerage firm Nuvama Research said RIL would be among the top 10 global producers of petrochemical products after the petrochemical expansions it has undertaken. Its foray in the new energy business would equal the oil-to-chemical segments profits in five–seven years.
RIL posted a 4% sequential climb in its revenue from operations to Rs 2.39 lakh crore for the quarter ended Dec. 31, 2024. The net profit of the oil-to-telecom conglomerate rose 12% sequentially to Rs 21,804 crore during the third quarter, on the back of a strong overall performance.
Here's What Brokerages Say
JP Morgan
RIL reported Q3 Ebitda of Rs 43,800 crore in line with forecasts and 5% ahead of Bloomberg consensus.
Retail top line/Ebitda grew 8.8/9.8%, defying fears of weak consumption and competition from quick commerce.
Reliance Jio Infocomm delivered 17% Ebitda growth, driven by higher average revenue per user following July tariff increases.
RIL's O2C segment Ebitda was slightly below expectations, while upstream Ebitda held up better than feared.
Refining margins have declined in January due to the sharp increase in oil prices.
RIL reported a flat QoQ net debt of Rs 1.15 lakh crore with a capex of Rs 32,300 crore incurred during the quarter.
The recovery in Reliance Retail's growth is expected to support the stock near term.
RIL's retail valuation implies a 34 times Ebitda multiple, while stock implied multiples are lower at under 20 times Ebitda.
The target price for RIL has been increased to Rs 1,520 from Rs 1,468 based on updated model forecasts.
The 'overweight' rating on RIL has been maintained, driven by the recovery in Reliance Retail's growth and the company's overall strong performance.
Axis Capital
Estimates for Reliance Retail's FY26/27 Ebitda have been cut by 3–5% due to broader consumption weakness.
Oil and Gas Ebitda rose 5% QoQ, driven by higher KGD-6 realisations.
Lowers gross refining margin estimates by $1/bbl to $7/bbl in FY25, and $9/bbl each in FY26 and FY27 due to continued weakness in refining margins.
Adjusts estimates to factor in Q3; revises target price to Rs 1,696.
RIL has underperformed the market by around 15% in the last 12 months, largely on weakness in retail.
Maintains 'buy' rating.
Nuvama Research
RIL's highest-ever Ebitda of Rs 43,800 crore beat estimates on strong showing across segments.
O2C Ebitda rose 16% QoQ and +2% YoY on higher fuel cracks, polymer deltas.
On long-term growth visibility, the brokerage expects RIL to be among the top 10 global producers post-petchem expansion. It has strong growth visibility on expectation of recovery in petchem margins.
New energy's foray to equal O2C's profits in five–seven years.
New energy business to add 50%-plus to consolidated PAT and much higher value given clean energy.
Deen Dayal Port and Khavda in Gujarat will add 50 GW renewable energy capacity and 2 MMT Green Hydrogen capacity to company's clean energy portfolio
Cuts FY26E Ebitda by 5% factoring in lower petrochemicals margin.
Reduces target price by 8% to Rs 1,673 from as it raised hold-co discount to 20% from 15% for consumer businesses as RIL prepares for listing its Jio and Retail businesses.
Retains 'buy' rating.
