Reliance Industries Poised for Strong Recovery: Bernstein Report

Reliance Industries Limited is set for a recovery in 2024, driven by telecom, retail, and refining sectors. Jio's ARPU is expected to grow 12% in 2025 without tariff hikes. Retail and refining are rebounding, and the company’s investments in renewable energy are anticipated to bolster its profitability.

In a report by Bernstein, Reliance Industries Limited (RIL) is anticipated to initiate a recovery cycle in 2024, following a challenging period, with telecom, retail, and refining sectors propelling this growth. The telecom giant, Jio, is expected to drive significant improvements, particularly with a projected 12% increase in Average Revenue Per User (ARPU) in 2025, alongside a 4-5% growth in subscriber numbers.

The report underscores a notable bounce-back in the retail segment, with expectations for double-digit EBITDA growth, strengthening RIL’s financial outlook. In refining, Gross Refining Margins (GRMs), which saw a decline to USD 9 per barrel, are also predicted to recover, thus enhancing the conglomerate's earnings. Additionally, valuation metrics reveal a current trading multiple of 10.1x forward EV/EBITDA, which is 17% below its three-year average, suggesting room for investor optimism with potential earnings growth hitting 19% or more by FY26.

RIL’s investments in energy, including plans for extensive solar and battery capacity expansion, are key to its future strategy, with initiatives like a 20 GW panel manufacturing plan for internal use and a 50 GWh battery manufacturing target by 2027 showcasing its commitment. Agreements such as a Power Purchase Agreement for 128MW and a Memorandum of Understanding with the Maharashtra government for substantial green hydrogen production highlight RIL’s strategic market positioning.