Reliance- A great company to add to portfolio
Hello,
Reliance Industries Ltd. engages in hydrocarbon exploration and production, petroleum refining and marketing, petrochemicals, retail, and telecommunications. It operates through the following segments: Oil to Chemicals (O2C), Oil & Gas, Retail, Digital Services, Financial Services, and Others.
Quarterly Performance (3Q FY25 vs 3Q FY24)
Gross Revenue increased by 7.7% Y-o-Y to ₹ 267,186 crore ($ 31.2 billion)
JPL revenue increased by 19.2% Y-o-Y due to continuing flow through of tariff revisions for mobility services, and healthy growth in homes and digital services businesses.
RRVL revenue increased by 8.8% Y-o-Y with growth across consumption baskets driven by festive buying and wedding season.
Oil to Chemicals (O2C) revenue improved by 6% Y-o-Y with higher volumes and increased domestic product placement. Planned shutdown of major units during the same quarter last year impacted volumes.
Marginally lower KGD6 volumes and fall in price realisations for CBM and condensate led to 5.2% decline in Oil and Gas segment revenue.
EBITDA increased by 7.8% Y-o-Y to ₹ 48,003 crore ($ 5.6 billion)
JPL EBITDA increased by 18.8% Y-o-Y driven by higher subscriber base, improving ARPU
and favorable mix.
RRVL EBITDA increased by 9.5% with improved operational efficiencies and superior store operating metrics.
O2C EBITDA increased by 2.4% supported by higher volumes and operational flexibility.
Efficient feedstock sourcing, higher domestic product placement and improved polymer deltas offset weak fuel cracks.
Oil and Gas segment EBITDA decreased by 4.1% largely on account of decline in volumes and price realisations.
Depreciation increased by 2.2% Y-o-Y to ₹ 13,181 crore ($ 1.5 billion).
Finance Costs increased by 6.7% Y-o-Y to ₹ 6,179 crore ($ 722 million), primarily due to higher debt balance. However, net debt remained largely flat.
Tax Expenses increased by 7.8% Y-o-Y to ₹ 6,839 crore ($ 799 million).
Profit After Tax and Share of Profit/(Loss) of Associates & JVs increased by 11.7% Y-o-Y to ₹ 21,930 crore ($ 2.6 billion).
Capital Expenditure for the quarter ended December 31, 2024, was ₹ 32,259 crore ($ 3.8 billion).
Below are the opportunities for the business.
Reliance
Reliance Retail targets 20% annual growth, doubling the market’s 10% CAGR.
Reliance plans 20GW solar PV by 2026, battery production, and strategic investments in O2C and O&G.
Risks to consider before investing
High freight costs, limited market presence, and balancing sustainability with profitability amid global over-capacity.
Tight crude supply, regulatory impacts on fuel, and competition from Chinese exports and trade agreement imports.
Our view.
I see an opportunity to buy reliance from the current point both from a technical perspective as well as fundamental analysis. The company is well aligned to capitalise on future growth. Zero crossover on the MACD indicator will confirm the buy bias.
Good luck.
