Reliance Industries posts resilient Q4 earnings amid economic headwinds: Emkay

Billionaire Mukesh Ambani-backed Reliance Industries Limited (RIL) reported its quarterly earnings for the fourth quarter of FY24, showcasing resilience in the face of economic challenges. The conglomerate's consolidated earnings before interest, taxes, depreciation, and amortisation (EBITDA) also known as operating profit stood at Rs 42,500 crore, with a profit after tax (PAT) of Rs 19,000 crore, deviating only slightly by 2-3 per cent. Despite a 3 per cent quarter-on-quarter decline in net debt to Rs 1.16 lakh crore, RIL's performance remained largely in line with expectations, brokerage firm Emkay said in a note.

The company's retail segment saw 8 per cent miss on EBITDA due to lower revenue. However, this was offset by improved performance in the Oil-to-Chemicals (O2C) segment, driven by higher utilisation and refining efficiency. Jio and Upstream segments performed in line with expectations, contributing to the overall stability of the conglomerate's earnings, analysts at Emkay said.

RIL's capital expenditure (capex) run-rate saw a decline to Rs 23,200 crore in Q4, although analysts project an annual capex of approximately Rs 1.2 lakh crore going forward, primarily driven by investments in new energy and petrochemical sectors. Analysts are optimistic about the potential impact of tariff hikes by Jio, considering the competitive landscape, while Oil & Gas and Retail segments are expected to maintain stability.

As a result of the company's strong performance and positive outlook, analysts have raised earnings estimates for FY25-26 by 2-5 per cent each. Moreover, the Sum-of-the-Parts (SOTP) based target price has been increased by 8 per cent to Rs 3,200 per share, reflecting higher profitability projections for Jio and a rollover to March 2026 estimates, Emkay noted.

In terms of operational highlights, the O2C segment witnessed a recovery in EBITDA, driven by increased utilisation and improved margins. Upstream earnings experienced a slight decline, while Jio reported strong net subscriber additions and stable Average Revenue Per User (ARPU) figures, analysts said.

Looking ahead, RIL remains well-positioned with steady earnings and positive free cash flow. The company's foray into new energy sectors is expected to further bolster its growth trajectory. RIL's diversified business model, coupled with its robust balance sheet, provides a strong foundation for future expansion and value creation, Emkay analysts added.