Buy RIL shares; Reliance Jio to contribute lion's share in FY25 Ebitda growth: Jefferies

 RIL: Jefferies said Q4 numbers for O2C and Reliance Jio were ahead of its estimates but retail segment missed estimates. It said Reliance Retail's growth was soft but balance sheet improved, aided by capital raise, asset divestiture.

Jefferies on Tuesday said Reliance Industries Ltd could report a 14 per cent growth in Ebitda in FY25 with Jio contributing a lion's share on account of tariff hikes. The foreign brokerage has upped its revenue and Ebitda estimates for Reliance Jio by 1-4 per cent and suggested a valuation multiple of 11.5 times EV/Ebitda, which is in line with valuations of Bharti Airtel Ltd.

Reliance Industries had on Monday said its pre-tax profit hit the Rs 1 lakh crore-mark in FY24, which was the first by any India company. Annual profit for JIO Platforms crossed the Rs 20,000 crore-mark while that for Reliance Retail surpassed the Rs 10,000 crore-market, it noted.

In the case of March quarter, while numbers for O2C and Reliance Jio were ahead of Jefferies' estimates, prints for retail segment missed estimates. Jefferies said Reliance Retail's growth was soft but balance sheet improved and net debt declined aided by capital raise and asset divestiture.

"Jio was ahead on higher ARPUs due to improved subscriber mix. O2C profitability rose on robust refiling while petchem was subdued. peak capex appears behind, FCF improved and net debt fell 6 per cent YoY," Jefferies said.

The foreign brokerage upped its FY25 Ebitda estimate by 3 per cent and FY26 by 1 per cent. It maintained a Buy on RIL with a target of Rs 3,380. On Reliance Jio, it said 5G is gaining traction and Jio will focus on growing it and home business in FY25. It raised its equity valuation for the business to $94 billion.

In the case of retail business, Jefferies said the balance sheet improved and net deb came off partly due capital raise and sale of warehousing assets. Reliance Reail, Jefferies said, took tough calls as FY24 saw high level of store closures. It values the retail businss at $109 billion.

For O2C business, Jefferies sees 5 per cent growth dragged by petchem business. 

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