Reliance IndustriesIn-line performance

Reliance Industries

In-line performance!

Our ADD rating on RIL with a price target of INR 2,140 /sh is premised on (1) 

induction of Facebook, Google, Intel and Qualcomm as partners in Jio

Platform, which should enable the company to accelerate the growth of digital 

connectivity and create value in the digital ecosystem through technology 

offerings, (2) recovery in refining and petchem businesses in FY22E, (3) the 

emergence of a clear path to a stronger balance sheet, and (4) stake sale in the 

retail business.

 RIL reported standalone revenue/EBITDA of INR 563/76bn, -35/-44% YoY 

(in line with our estimates). Standalone APAT stood at INR 65bn, -33% YoY 

(HSIE est: INR 36bn). The deviation in APAT from the estimates was mainly 

due to the tax expense reversal on account of reduction in the annual 

effective tax rate for FY21.

 Standalone refining segment: Crude throughput declined 8/8% YoY/QoQ 

to 15.3mmt. GRM stood at USD 5.7/bbl, down from USD 6.3/bbl in 1Q. The 

sequential decline in refining margin was due to lower cracks across 

products. RIL's GRMs outperformed Singapore GRM by USD 5.7/bbl (as 

against USD 7.2/bbl in 1Q).

 Standalone petrochemical segment: Production during 2Q was 9.7mmt, -

2/+9% YoY/QoQ. Petchem EBITDA was INR 59bn, -33% YoY given pricing 

pressure because of disruptions in the local and global markets. EBITDA/t 

stood at INR 6,052 (vs. INR 8,839/4,860 YoY/QoQ). 

 RJio: Revenue grew by ~33/6% YoY/QoQ to INR 175bn. ARPU rose to INR 

145 (+14/3% YoY/QoQ) while the gross/net subscriber addition was ~27/7mn. 

We expect ARPU to increase to INR 148/160 in FY21/22E owing to tariff hike 

in Dec-19.

 Reliance Retail (RR): Recovery from the pandemic has been encouraging 

across categories. Revenue nearly hit base quarter levels (Rs. 411bn). 85% of 

stores are now operational (1Q: 50%), of which half are fully operational. 

Footfalls clocked 75% of pre-covid levels (vs 43% in 1Q). Consumer 

Electronics (CE) doubled, and Fashion & Lifestyle (F&L) tripled their top-

lines respectively from their 1QFY21 lows (Yet to recoup base quarter sales). 

Grocery and connectivity continued their strong growth momentum. 

EBITDAM expanded 160bp QoQ to 5.4% as the mix sharply improved in 

favour of the high margin CE and F&L segment. (Note: EBITDAM still 

remains 90bp short of 2QFY20 levels).