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Reliance Industries: CMP: 2719 LT Sales: 13% | CY: Sales: 6% | H1_FY_25 RESULT UPDATE
#### *About Reliance Industries*:
Reliance Industries Limited (RIL) is an Indian multinational conglomerate company. RIL's diverse businesses include energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles. Reliance is one of the most profitable companies in India (1ST Company to reach 50k Cr Profits), the largest publicly traded company in India by market capitalization to reach 20 Lakh Cr, and became 1st Indian company this year to reach the milestone of 10 Lakh Cr gross revenue. The company was co-founded by Dhirubhai Ambani and Champaklal Damani in 1960's as Reliance Commercial Corporation. In 1965, the partnership ended and Dhirubhai continued the polyester business of the firm. in 1973, it became Reliance Industries Limited. In 1975, the company expanded its business into textiles, with "Vimal" becoming its major brand in later years. The amazing journey shows how once IDBI Bank rejected the loan of Dhirubhai, today RIL makes 3X more Profits then IDBI’s total revenue. The company managed to raise the fund from the public as they held its Initial public offering (IPO) in 1977 which was oversubscribed by 7X. In 2002, Reliance announced India's biggest gas discovery (at the Krishna Godavari basin) in nearly three decades and one of the largest gas discoveries in the world during 2002. This was the first-ever discovery by an Indian private sector company. In 2002–03, RIL purchased a majority stake in Indian Petrochemicals Corporation Ltd. (IPCL), India's second largest petrochemicals company, from the government of India.
*Fy_2004:* Revenue of 53000 Cr, Profits of 5000 Cr & Share Price of 85.
In 2005-6 the company reorganised its business by demerging its investments in power generation and distribution, financial services and telecommunication services into four separate entities. (ADAG group). In 2006, Reliance entered the organised retail market in India with the launch of its retail store format under the brand name of 'Reliance Fresh'. Today is the History as Reliance Retail is 5X to its next Competitor. In 2010, Reliance entered the broadband services market with acquisition of Infotel Broadband Services Limited, which was the only successful bidder for pan-India fourth-generation (4G) spectrum auction held by the government of India, here also they created the history and are today no#1.
*Fy_2014*: Sales of 4.4 Lakh Cr and Profits of 22000 Cr. Share price of 415.
*Fy_2024*: Sales of 9.2 Lakh Cr and Profits of 79000 Cr. Share price of 3000.
Reliance continues to be India's largest exporter, accounting for 8% of India's total merchandise exports and access to markets in over 100 countries. Reliance is responsible for almost 5% of the government of India's total revenues from customs and excise duty. It is also the highest income taxpayer in the private sector in India. Reliance beyond doubt A Great journey.
Having grown from 3000 Cr Sales & 200 Cr Profits in 1992, which is just 30 years back this year we saw RIL at Landmark 10 Lakh Cr gross revenue and now 1 lakh Cr profits is just 2-3 years reach. Yes, this is a great growth of 100X. Hence if invested 25 Years back would have received consistent dividends without a single-year failure along with value growth of 100X and receiving the dividends similar to Investment every year.
Everything they Do is largest. With the Largest & Most Complex Single Site Refinery, The Largest Digital Services provider in India & A Diversified & Largest sales making Product Portfolio of Groceries, Fashion & Lifestyle, Consumer Electronics & Connectivity across more then 18946 Stores (added 296 Stores in fY_25) across 79.4 million sqft in more than 1000 cities across India. Retail business was just with 5000 Cr sales and 982 stores in the year 2010 while last year we saw the landmark sales of around 3 lakh Cr from 18836 stores. Do remember that not even TCS which is the largest IT company, does 3 Lakh Cr sales. They are No#1 in stores. Jio was also just with 5000 Cr sales in the year 2018, today they make a sales of 1 Lakh Cr+ from 47.9 Cr subscribers. Big market share in Telecom. Adding near to 1.9 Cr new subscribers during past 4 quarters. Now they are going for Giga Factories in Green energy and here also they may be No#1 in the coming time. Just demerged the Financial service arm where again we may see some big move.
#### Industry Analysis
- **Oil & Gas**: The sector is experiencing volatility due to geopolitical tensions and fluctuating crude oil prices. However, domestic demand remains strong, driven by industrial activities and increased travel.
- **Retail**: The retail industry is witnessing steady growth with increased consumer spending and expanding e-commerce.
- **Telecommunications**: The telecom industry is growing with rapid 5G adoption and increased data consumption.
### **Reliance Industries Ltd. for H1 FY25**
### **Consolidated Sales Growth**
📈 **Sales Growth**: 5.9% YoY growth in consolidated sales revenue
H1 FY25 Sales: ₹ 515,850 crore (USD 30.8 billion) v/s H1 FY24 Sales: ₹ 487,128 crore
### **Segment-wise Insights and Sales Growth**
1. **Oil to Chemicals (O2C)**:
- **Revenue**: ₹ 155,580 crore
- 📉 **Growth**: 5.1% YoY (Moderate performance)
- 🏭 **Insight**: Weak global demand, fuel cracks down ~50%
2. **Digital Services**:
- **Revenue**: ₹ 71,667 crore
- 💻 **Growth**: 17.7% YoY
- 📶 **Key Insight**: Strong ARPU growth (+7.4%), data traffic +24%
3. **Retail**:
- **Revenue**: ₹ 151,917 crore
- 🛍️ **Growth**: -1.1% YoY (Slight decline due to weaker demand)
- 🏬 **Insight**: Stable operations with improved EBITDA margins
4. **Oil & Gas**:
- **Revenue**: ₹ 6,222 crore
- 🌍 **Growth**: -6% YoY (Lower gas price realizations)
- 🚀 **Insight**: Volume growth in KG D6; 11% EBITDA growth
### **Key Performance Indicators (KPIs) for Industries**
- **O2C Segment**:
- 📉 **Fuel Cracks**: Down 50%
- 🛢️ **Ethane Prices**: -47% YoY
- **Digital Services**:
- 📶 **Data Traffic**: +24% YoY
- 📡 **5G Subscribers**: 148 million migrated to True5G
- **Retail Segment**:
- 🛒 **Footfalls**: 297 million across formats
- 🏬 **New Stores**: 464 opened in H1 FY25
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### **Profitability Ratios**
- **EBITDA Margin**: 📊 16.8% in H1 FY25 (down from 17.8% in H1 FY24)
- **Profit Before Tax (PBT)**: 💰 ₹ 48,271 crore (down 5.5% YoY)
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### **Leverage Ratios**
- **Net Debt**: 💳 ₹ 116,438 crore (Flat YoY)
- **Net Debt to EBITDA**: 🔄 0.67x
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### **Liquidity Ratios**
- **Cash and Cash Equivalents**: 💵 ₹ 219,899 crore (up from ₹ 177,960 crore in H1 FY24)
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### **Cash Flow Analysis**
- **Capex**: 🏗️ ₹ 34,022 crore (Investments in O2C, New Energy)
- **Operating Cash Flows**: 💡 Strong operational cash flows supporting investments
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#### Peer Group Analysis
- **O2C Segment**:
- **Peers**: Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL).
- **Market Share**: Reliance remains a dominant player in the Indian petrochemical industry with significant refining capacity.
- **Retail Segment**:
- **Peers**: Avenue Supermarts (DMart), Future Retail, Trent.
- **Market Share**: Reliance Retail is the market leader in the Indian retail sector with a diverse portfolio.
- **Digital Services Segment**:
- **Peers**: Bharti Airtel, Vodafone Idea.
- **Market Share**: Reliance Jio continues to hold the largest market share in India's telecom sector.
#### Estimate Near term
We may see Revenue growth of just 4% this year while profits may decline by 4%. New buying again can be done during any fall in the whole range of 2230 to 2686 while target this or next year should be 3598 where some 5% profits can be booked.
### **Future Outlook**
- **O2C Segment**: 🔮 **Margins** expected to recover with global demand pick-up.
- **Digital Services**: 🚀 Continued growth with leadership in 5G and expanding home broadband.
- **Retail**: 🛍️ Further expansion across channels and profitability improvement.
- **Oil & Gas**: 🌍 Steady production volumes, with lower gas prices affecting near-term.
#### Key Highlights for Investors
- Diversified business portfolio mitigating risks across segments.
- Strong growth in consumer businesses and digital services.
- Prudent financial management with a robust balance sheet.
- Strategic investments in growth areas like 5G and retail expansion.
We may see Reliance cross 25 Lakh Cr Sales and Profits of 2 Lakh Cr till fy_35. Hence multiyear rally along with high and consistent dividends can be expected.
This analysis should provide a comprehensive view of Reliance Industries' financial performance and future prospects, aiding investors in making informed decisions. Do not consider this as a tip or recommendation as the sole purpose is education.
