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Reliance Industries Ltd

| RIL Q1 2025-2026 Media & Analyst Call Transcript

BULLISH SENTIMENT

Report Source

⬤18th Jul 25

Summary : Reliance Industries demonstrates strong Q1 growth across diversified businesses, driven by 5G, retail expansion, and new energy initiatives, despite some market volatilities.

Management Perspective positive : Management consistently used phrases like 'very strong numbers,' 'very confident,' 'multi-decadal growth opportunities,' 'superlative performance,' and 'perpetual perennial growth' to describe business performance and future outlook.

Concall Report Analysis & Insights

Business Overview

  1. Jio Platforms achieved 19% revenue growth and 24% EBITDA growth, driven by 5G deployment and 498 million subscribers.
  2. Reliance Retail delivered 11% revenue growth and 13% EBITDA growth, expanding its multi-category, omni-distribution network.
  3. FMCG business grew 2x year-on-year, with strong market share gains in beverages and other categories.
  4. JioStar became the second largest OTT platform globally, with 460 million MAUs and record IPL viewership.
  5. Oil to Chemicals (O2C) benefited from improved fuel cracks and polymer margins, with 36% volume growth in main fuels.

Future Growth Prospects

  1. Jio expects strong traction in enterprise 5G services and digital platforms like gaming and AI cloud.
  2. Reliance Retail plans accelerated growth through new store additions and expansion of quick commerce business.
  3. New Energy aims to operationalize its integrated giga-factories for solar, batteries, and green chemicals within 4-6 quarters.
  4. Upstream Oil & Gas plans incremental production by H2 2028 through exploration and additional wells.
  5. Jio Platforms' in-house tech stack offers significant incremental revenue opportunities and cost advantages globally.

Management Insights

  1. The company's diversified portfolio offers multi-decadal growth opportunities across all businesses.
  2. Proprietary technology and in-house tech stack are key differentiators for Jio's digital services.
  3. Reliance Retail's multi-category, multi-format, omni-distribution model provides resilience and growth optionality.
  4. New Energy ecosystem is designed for self-funding through profitability and monetization, targeting India's energy dilemma.
  5. Cost discipline and operating leverage are driving margin expansion across various segments.

Signs of Skepticism

  1. Management declined to provide segment-level growth rates for retail categories, making it harder to assess individual performance drivers.
  2. The 'doubling value by end of golden decade' target is ambitious, with specific short-term earnings impacts not fully detailed.
  3. New Energy's self-funding model relies on future profitability and monetization, which are still in early stages.
  4. The impact of streamlining operations on retail revenue growth was mentioned as ongoing, without a clear end date.
  5. The claim of UBR being a long-term solution comparable to fiber, despite fiber's established reliability.

Risk Factors

  1. Natural decline in KGD6 production impacts Oil & Gas revenues, partially offset by new projects.
  2. Volatile crude oil prices and freight rates affect refining margins and feedstock costs.
  3. Geopolitical tensions and tariff wars create supply chain disruptions and market uncertainty for petrochemicals.
  4. Consumer electronics sales were impacted by early monsoon rains in Q1, a seasonally weak quarter.
  5. Global overcapacity in paraxylene and new Chinese crackers pressure polyester chain margins.

Good To Know

  1. Jio Platforms has 498.1 million subscribers, with 9.9 million net additions and ARPU of Rs.209.
  2. Jio has connected 20 million homes, including 7.4 million air fiber homes, making it the largest FWA provider globally.
  3. Reliance Retail added 388 new stores, bringing total store count to over 19,600, and daily quick commerce orders grew 175% YOY.
  4. FMCG business revenue reached 4,400 Crores, a 2x YOY growth, with double-digit market share in key categories.
  5. New Energy is building 10 giga-factories for solar PV modules, batteries, and electrolyzers, with module manufacturing already operational.

Key Drivers

  1. Jio's 5G deployment drives subscriber growth.
  2. New Energy ecosystem nearing operationalization.
  3. Retail's quick commerce expands rapidly.
  4. FMCG business doubles year-on-year.

Key Analyst Discussions

Competitive Environment

  1. Jio's in-house tech stack provides a significant competitive advantage in faster ramp-up and cost control.
  2. Reliance Retail is much bigger than competitors, operating across more consumption baskets with inherent resilience.
  3. JioMart is the fastest-growing online grocery platform, leveraging store network and local partnerships for wider reach.
  4. JioStar's unparalleled viewing experience, including voice search and Maxview, differentiates it in the OTT market.
  5. New Energy aims to be the only end-to-end integrated business globally, leveraging deep tech and smart factories.

Market Trends & Consumer Behavior

  1. Consumer preferences are shifting towards convenience and immediate gratification, driving quick commerce demand.
  2. Demand for quick commerce is strong in smaller cities, with similar average basket values and better unit economics.
  3. Youth-driven fashion is digitally savvy and value-conscious, aligning with Ajio and Shein's strengths.
  4. IPL viewership broke records, indicating strong consumer engagement with sports content on digital platforms.
  5. 5G enabled devices are now 90-94% of new smartphones, accelerating 5G subscriber adoption.

Financial Highlights

  1. UBR CPE device cost is similar to FWA, but network equipment is more economical for Jio.
  2. Retail revenue growth moderation in Q1 was mainly due to consumer electronics and device pickup slowdown.
  3. Retail margins remained stable due to cost discipline, with expected expansion in coming quarters.
  4. JPL's non-connectivity revenue (4000 Crores) is primarily from external clients, with cloud services being the biggest driver.
  5. Digital services margins are lower due to the build phase, but expected to improve as revenues increase.

Product Composition

  1. Retail's fashion segment has the highest EBITDA margins due to own products and value chain control.
  2. Grocery and electronics have relatively thinner margins compared to fashion.
  3. Jio is launching new services like Jio Games (cloud-based gaming) and Jio PC (cloud computing) leveraging 5G network.
  4. New Energy's focus is on selling energy as a solution provider, with opportunistic sales of modules or wafers.
  5. Reliance Retail acquired Kelvinator brand IP to expand into more categories and strengthen its own brand portfolio.

Strategic Considerations

  1. UBR is a long-term, sustainable solution for home broadband, more economical than last-mile fiber.
  2. Reliance Retail is building dark stores to supplement its network and fill gaps in high-order volume areas.
  3. Inorganic growth for quick commerce is not currently prioritized due to integration difficulties and cost structures.
  4. FMCG demerger is awaiting regulatory approvals, after which shareholding will be replicated.
  5. New Energy's integrated production will start with modules and cells, gradually utilizing the full value chain.