RIL Q1 Results: Should You Buy, Sell, Or Hold Mukesh Ambani-Led RIL Shares?

The shares of Reliance Industries Ltd surged as much as 1.40% to hit an intra-day of Rs 1,345.90 apiece on Monday, July 20 after posting a consolidated net profit attributable to owners (PAT) of Rs 20,946 crore.

"RIL’s 1QFY27 consol EBITDA/PAT at Rs 475/209 billion beat our estimates by 6%/19%, up 8%/23% qoq – driven by better than expected O2C and upstream earnings and partly offset by weaker Retail," according to an Emkay brokerage report.

"We rollover to Jun-28E earnings; retain BUY/TP of Rs 1,680," it said.

Retail revenue grew 12% year-on-year (ex-FMCG spin-off impact; vs 17% estimate), while EBITDA missed by 10% as margins contracted on continued scale-up of hyperlocal delivery business. However, the management reiterated its target of doubling EBITDA by FY29," it said.

RIL Q1 Results Highlights

"O2C improved qoq, on higher fuel cracks/petchem deltas, though partially offset by ME conflict-led dislocations and SAED levy. O2C feedstock/sales were 18.1mmt/15.6mmt, down 7%/9% qoq; however, EBITDA/mt rose 22% qoq to $99.

• Upstream EBITDA rose 19% qoq to Rs 49.7 bn (25% beat), mainly backed by higher CBM volume/realization, higher crude realisation, and lower opex. KG Basin’s gas volume fell 2% qoq to 24.8mmscmd. 
•  Jio added 8.9 mn net subscribers, while ARPU was Rs 215.6 (up 1% qoq). JPL’s consol EBITDA rose 6% qoq to Rs 212.6 bn, as operating leverage played out with EBITDAM expanding by 40bps qoq. Net access charges fell 8% qoq to Rs 6.8 bn, while network opex rose 2% to Rs88.0 bn. 
• Retail EBITDA at Rs 63.1 bn fell 1% yoy (10% miss), as EBITDA margin fell 80bps, due to increasing contribution of hyper-local delivery business and associated costs. Net store addition was muted at 9 stores, with retail area stable qoq at 78.4msf.

RIL’s other income rose 6% YoY to Rs 65.5 bn (36% beat), while finance costs rose 18% YoY, on higher liability balances and 5G asset capitalisation.

Also Read: Why HDFC Bank Shares Tanked Over 5% On July 20

RIL Valuation

Basis SOTP method, we value RIL’s core segments on Jun-28E EV/EBITDA and New Energy/Other segments on EV-IC/EV-EBITDA. "We lower our target multiple for O2C and other segments. Key risks: Adverse commodity/currency movement, competition, delay in monetisation of ventures, and policy risks.

As of 10:45 AM, the shares of Reliance Industries Ltd (RIL) were trading 0.38 % higher to Rs 1,332.20 apiece.