RIL recalibrating business across oil to retail chain: Goldman Sachs Reliance Ebitda back to pre-Covid levels: Moody's

NEW DELHI: Reliance Industries Ltd, India's biggest firm, has reorganised oil to chemicals business, recalibrated retail operations, and is doubling down on its promise to offer 5G telecom services for the next leg of growth.

This plus focus on green energy and sustainable materials of the future, integrated 5G solutions, reorganisation of retail for new commerce and ramp-up of domestic gas production all point to the next leg of growth, analysts said in their commentary on third-quarter earnings of Reliance Industries Ltd (RIL).

Goldman Sachs said the sequential improvement in EBIDTA showcased a shift towards FCF generation, pivot towards a suite of digital launches sustaining sequential growth both for Jio and Retail, and focus on further chemical integration as O2C carve out is underway.

Telecom tariff hikes, new product launches (eg non-grocery e-commerce) and a potential energy business stake sale can reverse the pullback in Reliance shares since mid-September, it said.

HSBC Securities said the introduction of a single O2C segment, stronger fashion-driven retail and low effective tax were key surprises from results. "We like the business direction but believe retail execution still needs to evolve; O2C and digital won't have enough tailwinds."

"RIL is morphing into a pure consumer company with a reporting structure which now includes a single O2C segment, vs the traditional refining and petchem segments, as it endeavours to move further downstream towards consumer products," it said.

Bank of America and BofA Securities (BofAML) said RIL is looking to incubate new energy/materials platforms.

"Focus from O2C carve-out is to maximize profitability from downstream chemicals, reduce transportation fuels footprint in a phased manner."

Management expects a strong rebound in demand for fuels/ downstream products and net subscriber additions in Jio to bounce-back.

MUMBAI: Billionaire Mukesh Ambani's Reliance Industries Ltd (RIL) has seen pre-tax profit recover to pre-pandemic levels on the back of continued growth in consumer businesses, Moody's Investors Ser vice said on Monday.

The oil-to-retail-to-telecom behemoth on Friday reported a 0.7 per cent Ebitda (earnings before interest, tax and depreciation and amortisation) growth for the quarter ended December 31, 2020, compared with the corresponding quarter in the previous year.

"A strong per formance in digital ser vices and retail segments underpinned the improvement in consolidated earnings, a credit positive," Moody's said commenting on the earnings.

Continued growth in earnings combined with the company's strong balance sheet with zero net debt on a reported basis will keep Reliance's credit metrics strong for its Baa2 rating over the next 12-18 months, it said.

Its digital ser vices segment reported a 48.4 per cent Ebitda growth driven by an increase in subscriber additions, higher average revenue per user.