RIL Q3 Earnings Boosted; Analysts See Jio IPO as Key Catalyst

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AuthorKavya Nair|Published at:
RIL Q3 Earnings Boosted; Analysts See Jio IPO as Key Catalyst
Overview

Reliance Industries posted stronger December quarter results, with revenue climbing and EBITDA reaching a seven-quarter peak. The oil-to-chemicals segment showed robust growth. Despite a moderation in operating margins and a dip in oil & gas EBITDA, analysts widely reaffirmed their 'Buy' recommendations. The imminent Jio listing and advancements in new energy projects are highlighted as significant future catalysts for the Nifty 50 heavyweight.

Q3 Earnings Snapshot

Reliance Industries (RIL) reported its December quarter earnings, revealing a revenue increase to ₹2.65 lakh crore from ₹2.55 lakh crore in the prior quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) edged up to ₹46,018 crore, marking a seven-quarter high. Profit after tax saw a quarter-on-quarter increase, reaching ₹18,645 crore.

Segment Performance Varied

The oil-to-chemicals (O2C) business demonstrated strength, posting an EBITDA of ₹16,507 crore, up from ₹15,008 crore in the previous quarter. Conversely, the oil and gas segment experienced a decline in EBITDA to ₹4,857 crore. Reliance Retail recorded 8.4% year-on-year growth, supported by festive demand and GST rationalization, while Jio's average revenue per user (ARPU) improved to ₹213.7.

Analyst Confidence Remains High

Despite a moderation in operating margins to 17.4% and mixed segment results, nearly all analysts tracking RIL have reiterated their 'Buy' recommendations. Brokerages like CLSA, Citi, and Goldman Sachs maintained their positive stances, citing the O2C segment's performance, steady Jio operations, and progress in new energy initiatives. Many noted that recent stock price corrections may have already factored in near-term retail weakness.

Future Catalysts in Focus

The imminent initial public offering (IPO) of Jio Platforms was repeatedly cited as a significant catalyst. Analysts also pointed to potential tariff hikes in the telecom sector and the ramp-up of new energy projects, including solar and battery manufacturing, as key drivers for future growth through 2026. JPMorgan highlighted improved relative valuations following recent stock corrections.

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