RELIANCE - Reliance Industries Ltd Share Price

Management's outlook for Reliance Industries Limited (RIL) is cautiously optimistic despite recent geopolitical events impacting economic conditions. For the financial year 2025-26, RIL reported a 10% increase in revenue and a 13.5% increase in EBITDA, bolstered by strong performance in consumer businesses, which now contribute over 55% to EBITDA. Profit After Tax (PAT) growth was notable at 24%, with Jio Platforms and Reliance Retail contributing significantly.

Key highlights include:

1. Consumer Business Performance: Jio saw a 15% year-on-year increase in PAT, with 524 million total subscribers, including a robust 268 million 5G users. Jio's revenue reached Rs. 1,46,085 Crores, showing a 14.6% year-on-year rise. The company aims for continued subscriber growth, focusing on mobility, home, and enterprise services.

2. Retail Growth: RIL's retail unit achieved its highest quarterly revenue, reaching Rs. 98,000 Crores with an 11% year-on-year growth. The sector added 333 new stores and crossed a milestone of 20,000 total stores.

3. Petrochemical Insights: For the oil-to-chemicals (O2C) segment, revenue growth stood at 10%. Although the environment was challenging due to crude supply issues, proactive management enabled RIL to maintain operational stability.

4. New Energy Initiatives: In the New Energy sector, RIL has entered a significant green ammonia supply contract with Samsung C&T, indicating strong market confidence in its renewable energy initiatives.

5. Strategic Focus Areas: Management highlighted priorities such as enhancing 5G services, expanding digital solutions, and maintaining an agile supply chain to adapt to volatile conditions in crude markets.

The management's focus on high-quality growth across businesses while navigating short-term challenges sets a forward-looking tone, signaling confidence in long-term strategic initiatives and operational capabilities.

Question: "If alternate crudes continue to be sort of the only option that we have, the dispute sustains for a while longer, now the chemical composition of crudes from the US and Africa and even Venezuela are markedly different in terms of sulfur content, API and others. So, how much of distillate yield can actually change because obviously, US crudes and Venezuelan crudes are geared towards more of light distillates?"

Answer: "Venezuelan crude is very heavy while US crude is lighter. Our refinery is designed to process heavy crude, so we see re-entering Venezuelan crude as beneficial. Moreover, Russian crudes are similar to Middle Eastern grades, which mitigates potential issues. We blend various crudes to maintain a consistent output, ensuring we do not anticipate significant problems with compositional changes in crude."

Question: "Is there some sort of a level at which we look at price increases, because obviously losses are significant even for us, in this quarter?"

Answer: "We've experienced substantial sales growth, approximately 20% year-on-year. While there's pain, we must maintain perspective on the long-term market. Despite some immediate hardships, we plan to continue supplying products in the domestic market without cutting back operations, anticipating potential recoveries in the market to offset current losses."

Question: "How is the situation now in Q1 regarding procurement, freight, and costs? What should we expect for margins on refining and petrochemicals for the rest of the year?"

Answer: "The situation has slightly improved from the worst-case scenario, although it remains fluid. Crude premiums have decreased significantly from their peaks, and refining margins appear strong due to market apprehensions about product availability. We expect structural strength in refining margins as market dynamics stabilize."

Question: "What percentage of our production is impacted by SAED?"

Answer: "The entirety of our DTA refinery is affected by SAED, particularly on diesel and gasoline. While about 4-5% of our market share feels the impact, it's important to note that our primary focus is on long-term strategies beyond short-term challenges."

Question: "What drove JPL growth to be higher than Jio's growth?"

Answer: "JPL's growth is rooted in operating leverage due to a comprehensive range of services being offered. The slight expansion in margins comes without a corresponding increase in service costs, creating a substantial boost in our profitability."

Question: "What is your outlook on Jio's IPO timeline and AI data centers?"

Answer: "The IPO is imminent, with significant groundwork already in place. We will keep investors updated on progress. As for AI data centers, work is underway to create data centers to serve both captive and partner needs, which will be expanded in upcoming quarters."

Question: "What are the other chemical and petrochemical products where you believe availability can be a challenge if the situation continues?"

Answer: "Beyond LPG and PVC, methanol and natural gas supplies are critically impacted due to the Ras Laffan situation, affecting fertilizers too. The government is actively working to ensure critical sectors remain supplied during these disruptions."

Question: "When do you think the dilution in EBITDA margin will stabilize because of quick commerce?"

Answer: "The stabilization of EBITDA margins relies heavily on the growth mix among physical stores, quick commerce, and B2B initiatives. If we can balance the growth rates of these areas, we may see improved margins as our offline business continues to grow."

Question: "In what ways is Jio aiming to capitalize on market share in the next couple of years?"

Answer: "We aim to increase market share in mobility through our network advantage, expand home and enterprise services, and grow our digital services offerings. Exciting developments are on the horizon, and we expect to maintain a differentiated position in the market."