Reliance Industries Ltd. share price target

In this report, we present key highlights from our recent meeting with Reliance Industries (RIL).

Assuming Rs25-30 hike in ARPU, it translates to incremental EBIDTA of Rs85100bn. Reliance JIO has launched All-in-One Plans' with higher tariffs following hikes by Vodafone and Airtel. After three years of severe tariff war, price hikes are welcome and we expect further hikes going forward. We increase RJIO's ARPU assumptions for FY21-22E to Rs 170 /180 vis--vis FY20 rate of Rs130....

High ARPU prepaid plans have seen ~27% price hike, which would result in ARPU increasing by INR38 from INR142 to INR180. While no rates have been disclosed for low ARPU Jio feature phone subscribers, we assume ~30% price hikes for these subscribers too. Low ARPU Jio phone subscribers would probably see a hike of INR25 in ARPUs from INR84 to INR109. The price differential between RJio and Bharti/VILs price plans is constant at ~INR40-50 for most of the popular quarterly bundled plans; however, we see the discount of RJios plan over Bharti/VIL reducing to ~8% from ~11-13% witnessed in the previous months. The hike in ARPUs should result in ~INR134b/INR119b incremental revenue/EBITDA, which is ~25%/58% rise over the previous revenue/EBITDA (2QFY20 annualized) with 89% incremental EBITDA. This is on the back of INR100b interest cost, which should be contained due to the recent capital reorganization announcements and reducing capex intensity in the market as indicated by RJio and other telcos.

Markets await Q2 growth print

Loan growth plummets to 8%

Q2FY20 topline grew 4.2% YoY to Rs. 152,149cr, primarily driven by growth in the Retail segment (+27.0% YoY; contributed ~20.3% of revenue) and Digital Services segment (+42.7% YoY; ~7.7% of revenue). This was partially offset by the lackluster performance from Petrochemicals (-11.9% YoY; ~19.0% of revenue) and Refining segment (-1.6% YoY; ~47.9% of revenue) due to unplanned outages, continued effect of trade tensions and raw material price volatility. Standalone exports fell 12.1% YoY to Rs. 53,161cr. Overall EBITDA margin was up 170 bps YoY to 17.0%, helped by margin expansions in Retail (+180 bps YoY) and Digital Services operations (+315 bps...

October MPC Minutes: Growth concerns imply another 25bps cut. RIL: Cyclicals a mixed bag, RJio and Retail surge ahead. LTI: On course for a rebound. Ather Energy: Key call takeaways. Agriculture: Maharashtra's sugar production to nearly halve in 2019-20

RIL's core refining business gains from upcoming IMO regulations. However, both refining and petchem face demand slack with impending capacity additions over CY19/20E. We expect a near term topping out from these businesses. While the Grocery and F&L businesses will continue to grow in the near term, CDIT's growth (36.4% of total sales) should cool off as Jio sub adds moderate. Monetisation of Jio's infrastructure is a positive trigger, but timing/pricing are crucial. Maintain NEUTRAL. We maintain NEUTRAL on RIL post an inline performance in 2QFY20. Our SOTP valuation is Rs 1,526/sh (7.5/9.0x EV/e for refining/petchem, 18.0x EV/e for Retail, 10x EV/e for Telecom business and Rs 116/sh for E&P; assets).

Reliance Industries (RIL) achieved net sales of Rs 152149 crore, an increase of 4% as compared to Rs 146018 crore in the corresponding period of the previous year. Increase in revenue is primarily on account of robust growth in Retail & Digital Services businesses which grew by 27% and 43%, respectively. This was partially offset by decrease in Refining and Petrochemicals segment revenue with 17.7% fall in Brent crude price. Exports (including deemed exports) from RIL's India operations were lower by 12.1% at Rs 53,161 crore as against Rs 60,460 crore in the corresponding period of the previous year primarily due to lower price realization for refining and petrochemical products and emphasis in domestic placement....

Reliance Industries' (RIL) Q2FY20 EBITDA marginally beat estimates at Rs 221bn (+5% YoY, +4% QoQ).