Reliance Industries Ltd (NSE: RELIANCE): Reliance Industries Ltd has decided to double EBITDA in the next five years. The company announced its plans during the 47th Annual General Meeting (AGM) on 29 August.
This announcement has increased investors’ confidence in Reliance Industries Ltd. The company will expand the oil-to-chemical and digital and retail businesses to double EBITDA by 2030.
It will also increase focus on the new energy business. The EBITDA growth of the company’s consumer business has been double-digit.
Good Growth Is Expected From Jio And Reliance Retail
According to a first brokerage firm, the CAGR of EBITDA of RJio and Reliance Retail is estimated to be 25 percent and 19 percent respectively between FY24 and FY26.
The first brokerage firm has said in its report, “New categories in the retail sector, focus on subscriber growth and increase in tariff in telecom business will contribute significantly to this growth.”
Jio’s Data Price Is One-fourth Of The Global Average
According to a second brokerage firm, Reliance Industries Ltd’s AGM focused more on Jio. The company announced a focus on air fiber and entry into data centers.
Jio has an 8 percent share of the total data market in the world. The price of Jio’s data is one-fourth of the average price in the world, while it is only 10 percent of the price in developed countries.
13 crore Jio users are using 5G services. The second brokerage firm has said that this number will increase further with the availability of 5G facilities in smartphones priced above Rs 8,000. More than 20 crore people are using 2G and 4G services.
75000 Crores Investment In The Energy Sector
In the AGM, Reliance Industries Chairman Mukesh Ambani said that in the next 5-7 years, the profit earning capacity of the new energy business will be as much as the O2C segment.
Currently, the O2C business is the biggest basis for the profit of Reliance Industries Ltd. Its share in EBITDA is 40 percent, and in profit after tax, it is more than 50 percent.
Reliance Industries Ltd will invest 75,000 crore rupees in the development of an ecosystem to support the new energy economy. The third brokerage firm has said that the company is giving priority to O2C and New Energy business.
Possibility Of A 15-20 Percent Increase In Price From The Target Price
The first brokerage has said, “In O2C business, we expect refining segments to grow from current levels. Apart from this, we will get the full benefit of volume growth in the MG field in FY25.”
According to the commentary of the AGM, if the work on the plan progresses properly and the projects are completed on time, then the share of Reliance Industries can see a 15-20 percent rise in the target price of Rs 3,335 of Emkay Global.
Doraba Rating Forecast Of Share
The fourth brokerage firm has maintained its buy advice on the share of Reliance Industries Ltd. The reason for this is that the rollout of the new energy business will not only increase profits by more than 50 percent but will also re-rate its valuation.
This will also include O2C business. The company has set a target of net-zero carbon by 2035.
The fourth brokerage firm has also said that RIL’s EBITDA CAGR will get a boost from FCF generation. It will also be affected by the reduction in net debt.
Quick Fact
| Company name | Reliance Industries |
|---|---|
| Double EBITDA target | Next 5 years |
| Focus areas | Oil-to-chemical, Digital, Retail, New Energy |
| Consumer business EBITDA growth | Double-digit |
| RJio EBITDA CAGR (FY24-FY26) | 25% |
| Reliance Retail EBITDA CAGR (FY24-FY26) | 19% |
| Key growth drivers | New retail categories, Subscriber growth, Telecom tariff increase |
| Jio global data market share | 8% |
| Jio’s data price | One-fourth of the global average |
| 5G users | 13 crore |
| 2G and 4G users | 20 crore |
| Smartphone 5G pricing focus | Above ₹8,000 |
| Investment in new energy ecosystem | ₹75,000 crore |
| O2C business EBITDA share | 40% |
| Profit after tax share (O2C) | Over 50% |
| New energy business profit expectation | Equal to O2C in 5-7 years |
| Possible target price increase | 15-20% |
| Possible target price | ₹3,335 |
| Net-zero carbon target | By 2035 |
| Valuation boost factors | New Energy rollout, O2C business |
| EBITDA CAGR boost | From FCF generation and debt reduction |
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