RELIANCE - Reliance Industries Ltd Share Price

During the earnings call on July 18, 2025, the management of Reliance Industries Limited provided an optimistic outlook for the company, emphasizing multi-decade growth opportunities across various sectors. The key highlights included:

1. Digital Services and Jio: The Jio segment reported a 19% increase in revenue and a 24% rise in EBITDA. The company now serves approximately 498 million subscribers, reflecting strong traction in connectivity and technology development.

2. Retail Growth: Revenue growth in retail reached 11%, with notable performances in multi-category and multi-format distribution. The EBITDA margins increased by 20 basis points year-on-year, with rising consumer demand anticipated as expansion resumes.

3. New Energy Initiatives: Management highlighted the construction of advanced, integrated manufacturing facilities for solar and battery production. They aim to start operationalizing the new energy ecosystem in 4 to 6 quarters, enhancing the company's growth trajectory in sustainable energy.

4. Media and Entertainment: The newly formed JioStar platform achieved significant viewership during the IPL, reaching 652 million on digital and 537 million on TV, demonstrating the potential for high viewer engagement and monetization.

5. Financial Performance: Total EBITDA for the group rose to Rs.58,000 crores, a 36% increase, supported by strong growth across digital services, retail, and O2C sectors. The effective tax rate remained at 17.5%, facilitated by a significant capital gain from the sale of shares in Asian Paints.

6. Future Direction: Management reiterated their commitment to doubling the company's value by the end of the decade, as outlined by the Chairman previously.

7. Capital Expenditure: For the year, the company has allocated a capex of Rs.30,000 crores, focusing on bolstering growth while managing debt levels effectively, with a current net debt to EBITDA ratio of 0.59.

These points underline Reliance's robust growth trajectory and the strategic focus on technological advancements, sustainable energy, and diversified retail operations, positioning them well for future opportunities.

Q&A Session Highlights from Reliance Industries Limited Earnings Transcript (July 18, 2025)

Question 1: What is the cost differential between UBR and FWA, and is UBR a long-term solution?

Answer: The cost difference in CPE devices is not large, but the network equipment for UBR is more economical. UBR is a long-term solution and can run for decades. It is preferable when fiber is not already available. There's confidence in UBR's sustainability due to available spectrum, making it a cost-effective long-term solution compared to last-mile fiber.

Question 2: What is the sustainability of the recent 2.6 million FBB additions?

Answer: The addition rate has remained steady post-IPL, with some promotional offers still in place to drive usage. Our net addition run rate has actually picked up, indicating sustained growth beyond IPL, with some months seeing over a million net ads.

Question 3: Has retail revenue growth moderated due to strategic changes, and which categories are affected?

Answer: The moderation is primarily within consumer electronics due to seasonality and demand impacts. Grocery and fashion performed reasonably well. Q1 is typically the weakest quarter seasonally, but we expect a rebound in growth as we continue to add stores and ramp up for the festive season.

Question 4: How have margins remained stable despite lower revenues in retail?

Answer: Margin stability is due to operational optimization and cost discipline from previous store closures. Although we have incurred costs related to streamlining, benefits are starting to flow through, and as sales grow, we expect margins to improve at the segment level in subsequent quarters.

Question 5: What is the expected growth trajectory for Jio Platforms' various digital services?

Answer: The growth from digital services is expected to be sustainable. Cloud services are a significant driver of revenue growth, and as we launch more services, revenues will increase. Current performance suggests that the enterprise segment has been improving, supporting our optimistic outlook for ongoing growth.

Question 6: Are dark stores part of the strategy for quick commerce, and how does that affect competition?

Answer: We are indeed building dark stores to enhance our capability in cities where our existing stores can't meet demand. They are designed to supplement our stores and address market gaps. Our strategy focuses on leveraging existing infrastructure for better economics rather than pursuing inorganic growth, as it provides a competitive advantage in high-demand regions.

Question 7: When can we expect to see the integration of production for new energy projects?

Answer: We will not wait for all factories to complete; integrated production will begin as each part comes online. We are already looking for external sales opportunistically, but our primary focus is on meeting our significant internal requirements first, leveraging our position as a solution provider.

Question 8: With new energy initiatives, what are the main projects impacting profitability in the medium term?

Answer: Key projects include new energy initiatives, Jio expansion, and retail enhancements. Although they won't deliver immediate profitability, they are designed to generate significant long-term value through their scale and integrated operations, supporting the group's financial targets effectively.