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RIL Q1 results LIVE: Reliance Industries net profit may soar over 30% on-year; net sales may jump 80% – The Financial Express

RIL share price fell 0.74 per cent to Rs 2,105.20 apiece on Friday, ahead of Q1 results. Image: Reuters

RIL Q1 FY22 results LIVE: Mukesh Ambani-led Reliance Industries Ltd (RIL) is all set to announce April-June quarter results of FY22 on Friday, 23 July 2021. The company will highlight RIL’s performance across its telecom, retail, and oil-to-chemicals businesses, during the first quarter of FY22, when COVID-19 second wave struck India. Analysts at Kotak Securities estimated adjusted PAT to grow 24.7 per cent on-year, and see 80.4 per cent on-year jump in net sales. Those at Motilal Oswal expect RIL’s Q1 adjusted PAT to surge by 23.8 per cent on-year, and see 55 per cent rise in net sales. Those at Emkay Global Financial Services see 31.3 per cent on-year rise in PAT and 60.6 per cent on-year jump in net sales.

RIL share price fell 0.74 per cent to Rs 2,105.20 apiece on Friday, ahead of Q1 results. However, stock has surged nearly 12 per cent in three months and 3.7 per cent in six months. On a year-to-date (YTD) basis, it is up 7 per cent, while down a per cent from 52-week high

Higher O2C margins, though offset by lower volumes; Retail EBITDA may fall; Jio ARPU to remain largely flat qoq, ~5.0mn sub additions in Q1FY22; Consolidated ETR for Q1 assumed at 25.2% Emkay Global Financial Services

In our view, it is simply impossible for Reliance to go it alone given the technology required in new energy, especially in batteries and fuel cells. For solar PV it might be possible, but for the other areas they will require a partner with expertise. China for example, has spent billions on fuel cell technology and ultimately ended up making investments in key companies such as Ballard Power to get better access to the best technology.  For energy storage, it is similarly impossible to imagine that Reliance could go it alone without assistance from a third party. For energy storage, the most obvious partners would be the Korean battery makers such as LG Chem, Samsung SDI or SKI. Reliance would certainly enable access to India, a potentially enormous market for these companies. However, while these companies have partnered with OEMs it is unclear whether these companies would be willing to partner with Reliance Industries, which would be seen as a potential competitor. Given geopolitical issues, we think it unlikely that Chinese players would enter the market.

~ Bernstein

For Jio, we expect 5mn net subscriber additions and Rs137 ARPU. We estimate consolidated APAT post JPLRRVL minority interest to  decline 18% qoq to Rs109bn. We assume an effective tax rate of 25.2%. Upstream earnings should improve. Emkay Global Financial Services

We estimate RIL’s consolidated EBITDA to remain flat qoq at Rs235bn as an uptick in O2C income (driven by margins) would be offset by a sharp drop in Retail EBITDA (Rs24.7bn). Emkay Global Financial Services

Analysts at Morgan Stanley expect Reliance Industries to post a 79% on-year jump in net profit during the April-June quarter. 

We remain Neutral with a March-22 PT of Rs 2,250. We value O2C at an EV of $70bn (and build in growth optionality in O2C upon a stake sale), and value Retail at $73bn with a Jio Mart value of $23bn. We also give a 1x investment value for the proposed Green Energy/Renewable investment. We believe higher oil prices, expectations of a refining margin recovery, and ramp-up of Jio Mart should continue to support the stock JP Morgan

Reliance has set an ambitious target to grow its Retail business by 3x over next 3-5 years. This will be driven by the expansion of retail footprint/delivery hubs, supply infrastructure and sourcing ecosystem. The company plans to add 10M merchants over the next 3 years from current base of 0.3M. JioMart reached a peak order base of 0.65M/day. The company has launched trial integration of JioMart and WhatsApp with full-scale solution launched over next few quarters.

~ Bernstein

Reliance Retail business has added 65,000 new jobs and the company aims to further create employment for over 10 lakh people in the next three years. Mukesh Ambani in 44th AGM last month said that Reliance Retail will grow three times in next 3-5 years

Reliance Industries net revenue for the April-June quarter is expected to grow 61% on-year basis, while consolidated EBITDA is expected to jump 40.3%.

~ Morgan Stanley

RIL Chairman Mukesh Ambani spelt out the strategies and roadmap of the company’s digital and retail businesses at 44th Annual General Meeting (AGM). RIL chief announced his plans to make India 2G-mukt (free from 2G) and make the country 5G-enabled. He also launched the JioPhone Next, an ultra-affordable 4G smartphone jointly developed by Google. 

In Retail, the focus is on five growth initiatives: 1) store additions, 2) continued acquisitions, 3) investments in research-tech, 4) strengthening sourcing ecosystem for new commerce and 5) building supply-chain infra Emkay Global Financial Services

Reliance Retail’s (RRVL, 85% owned by RIL) acquisition of Just Dial (NC) is not very large in RIL’s context (67% stake purchase would cost $773mn) and adds one more digital property to RRVL’s bouquet JP Morgan

A draw in global oil product inventory as demand recovered has led to a rise in gasoline and diesel margins,and also petcoke gasifier should have supported margins due to rise in spot LNG prices. However the unplanned outage at the refinery and lower domestic sales should lead to lower utilisation and also impact RIL’s GRMs. Hence, we expect refining margins to remain flat QoQ at US$6.6/bbl, despite ~8% higher industry margins.

~ Morgan Stanley

HDFC Securities maintained a price target of INR 2,280 /sh for RIL premised on recovery in the O2C businesses; continued EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition and newer revenue streams; and potential for further value unlocking in the digital and retail businesses. 

‘We see strong structural growth in EBITDA ahead for the company. We estimate EBITDA for FY22 of INR1,196bn, which is almost double what it was few years ago. On our estimates, we believe that EBITDA can double again by FY25, mainly through the growth in new energy, digital and retail, while the O2C will recover back to pre-COVID levels,’ said Neil Beveridge. of Bernstein.

RIL share price fell 0.74 per cent to Rs 2,105.20 apiece on Friday, ahead of Q1 results.

Motilal Oswal valued the O2C business at FY23E EV/EBITDA of 7.5x, arriving at a valuation of INR764/share for the standalone business, and add INR68 for the E&P assets.

With a strong balance sheet, the company is expected to adequately fund the capital expenditure. “Its per unit cost leadership in conventional energy gives us confidence that it will achieve top quartile unit costs in RE too. We see RIL emerging as India’s most credible RE player,” Jefferies said.

Mukesh Ambani’s Reliance Industries Ltd (RIL) could surge as much as 50% from current levels, according to global brokerage and research firm Jefferies. Value unlocking from the renewable energy push, stake sale in oil-to-chemical business, and maybe even the public listing of Reliance Jio are expected to support the massive rally in RIL stock

Over the last three years, Mukesh Ambani’s Reliance Industries has made multiple acquisitions across digital properties including NetMeds, Urban Ladder, Zivame.

Reliance Retail has signed an agreement to acquire 40.95 per cent in Just Dial for a consideration of Rs 3,497 crore and will subsequently make an open offer to acquire additional 2.17 crore equity shares of the search engine platform representing 26 per cent in accordance with the takeover regulations.

Funding is not an issue for Reliance given the current balance sheet, Bernstein said. Reliance is almost debt-free and will generate cash flow of Rs 65,600 crore in FY22 and grow to Rs 1.5 lakh crore by FY26

According to Bernstein, RIL conglomerate worth over USD 261 billion.

Mukesh Ambani in annual general meeting of shareholders last month announced a plan to invest Rs 75,000 crore in a new energy business over the next 3 years in the next stage in its transformation.

Reliance currently has three verticals — oil-to-chemical (O2C) business that houses its oil refineries, petrochemical plants and fuel retailing business; digital services that comprises telecom arm Jio; and retail including e-commerce. New Energy will be the fourth vertical.

Billionaire Mukesh Ambani-led Reliance Industries Ltd’s plans for investing Rs 75,000 crore in solar, batteries, fuel cells and hydrogen could create valuation of USD 36 billion (Rs 2.6 lakh crore) for the new energy business, Wall Street brokerage Bernstein Research said in a report.