Reliance Industries Reports Robust Growth Amid Strategic Initiatives

Quarterly Performance Highlights

Reliance Industries Limited (RIL) has reported a commendable 14% year-on-year growth in net profit for the September quarter, alongside a 14.6% rise in Earnings before Interest, Tax, Depreciation, and Amortisation (EBITDA). These impressive figures are largely attributed to improved 5G monetization strategies, a cyclical recovery in its oil-to-chemicals (O2C) division, and a strong retail expansion.

Capital Expenditures and Profitability

Despite a significant increase in capital expenditure to ₹40,000 crore—up from ₹29,875 crore the previous quarter—RIL maintained a stable net debt-EBITDA ratio of around 0.6, reflecting sustained profitability across its various divisions.

Advancing Solar Manufacturing

The company is making significant strides towards establishing a fully integrated solar manufacturing value chain. The solar cell giga-factory at Jamnagar is set to commence operations in October, marking a key milestone in RIL’s renewable energy initiatives.

Backward Integration Initiatives

As part of its commitment to backward integration, RIL is establishing polysilicon, ingot, and wafer facilities. This strategic move aims to create a comprehensive solar photovoltaic (PV) value chain, aligning with global sustainability trends.

Investments in Artificial Intelligence

Shifting focus to future capabilities, RIL is heavily investing in datacenters and artificial intelligence (AI) through its wholly-owned subsidiary, Reliance Intelligence. The recent joint venture with Meta, involving an initial capital expenditure of $100 million—two-thirds funded by RIL—aims to bolster its offerings for enterprise clients.

O2C Division Performance

RIL’s oil-to-chemicals (O2C) division remains a core component of its revenue generation, accounting for nearly 57% of the consolidated revenue of ₹2.8 lakh crore. The division’s EBITDA grew significantly by 21% year-on-year to ₹15,008 crore, supported by a margin expansion of 130 basis points to 9.3%.

Market Conditions Favoring O2C

The favorable O2C outlook is driven by a recovery in fuel spreads, with margins for gasoline, jet fuel, and diesel witnessing a year-on-year rise of 22-37%. This positive trend is expected to continue, particularly with the festive season approaching and closures of capacities in western markets.

Jio Platforms Subscriber Growth

Jio Platforms, which oversees RIL’s telecom and digital services, reported strong subscriber growth, pushing its total user base to 50.6 crore. Notably, 23.4 crore users have adopted 5G technology. The average revenue per user (ARPU) also increased to ₹211.4 per month from ₹195.1 a year ago.

Increased Data Usage Metrics

This ARPU growth is further supported by a substantial 30% year-on-year and a 6.8% sequential increase in data usage, which peaked at 58.4 billion GB during the quarter. This positions RIL favorably as it encourages existing users to transition to 5G, which currently constitutes 50% of Jio’s network traffic.

Retail Growth Insights

Reliance Retail’s gross revenue reached ₹90,018 crore, marking an 18% year-on-year increase. The division’s EBITDA rose to ₹6,816 crore, showcasing a 16.5% growth. This surge is attributed to strong festive demand, particularly in grocery and fashion segments.

Quick Commerce Expansion

Additionally, RIL recorded a remarkable uptick in quick, hyper-local commerce, with daily orders skyrocketing by 200% year-on-year and 42% sequentially. Such expansion reflects the company’s adaptability to changing consumer behaviors.

Analyst Upgrades and Stock Predictions

Analysts have slightly revised their estimates for RIL’s consolidated revenue and EBITDA, reflecting steady performance across Jio, retail, and O2C divisions. Emkay Research anticipates a 2% increase in FY27 revenue and a 1% rise in EBITDA, while adjusting the net profit estimate downwards by 3% due to non-operating factors.

Rating and Target Price

The brokerage firm has retained a “buy” rating on the stock with a target price of ₹1,680, indicating a 19% premium over Friday’s closing stock price of ₹1,417 on the BSE.

Conclusion

In summary, Reliance Industries is positioned for continued growth through strategic investments in renewable energy, technology, and robust performance across its subsidiaries. With favorable market conditions and strong consumer demand, RIL appears set to maintain its momentum in the upcoming quarters.