02 November 2020 Results Review 2QFY21 Reliance Industries HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters 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). Financial Summary – Consolidated Year Ending March (INR bn) 2Q FY21 1Q FY21 QoQ (%) 2Q FY20 YoY (%) FY20 FY21E FY22E FY23E Net Sales 1,112 883 26.0 1,485 (25.1) 5,967 4,718 6,068 6,965 EBITDA 189 169 12.3 222 (14.5) 882 708 964 1,076 PAT 105 129 (18.8) 113 (7.1) 427 369 555 640 Diluted EPS (INR) 14.8 14.2 4.4 19.0 (21.9) 67.4 57.3 82.0 94.7 P/E (x) 30.5 35.9 25.0 21.7 EV / EBITDA (x) 17.7 19.1 13.2 11.5 RoE (%) 10.2 7.7 10.2 10.3 Source: Company, HSIE Research ADD CMP (as on 30 Oct 2020) INR 2,054 Target Price INR 2,140 NIFTY 11,642 KEY CHANGES OLD NEW Rating ADD ADD Price Target INR 2,051 INR 2,140 EPS % FY21E FY22E +10.7 +1.6 KEY STOCK DATA Bloomberg code RIL IN No. of Shares (mn) 6,339 MCap (INR bn) / ($ mn) 13,024/174,,681 6m avg traded value (INR mn) 39,030 52 Week high / low INR 2,371/867 STOCK PERFORMANCE (%) 3M 6M 12M Absolute (%) (2.6) 41.5 40.2 Relative (%) (7.6) 24.0 41.3 SHAREHOLDING PATTERN (%) Sept-20 Jun-20 Promoters 50.49 50.37 FIs & Local MFs 13.39 13.61 FPIs 25.20 24.72 Public & Others 10.92 11.30 Pledged Shares 0.0 0.0 Source : BSE Harshad Katkar [email protected]+91-22-6171-7319 Nilesh Ghuge [email protected]+91-22-6171-7342 Jay Gandhi [email protected]+91-22-6171-7320 Divya Singhal [email protected]+91-22-6171-7348 Rutvi Chokshi [email protected]+91-22-6171-7356
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02 November 2020 Results Review 2QFY21
Reliance Industries
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
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
From 2nd March 2020, we have moved to new rating system
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Reliance Industries: Results Review 2QFY21
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