Reliance share price: UBS Research expects 10% further upside led by growth trends in Jio and retail

Stock Market Today: Reliance Industries share price having gained more than 20% year to date is poised for more upside believe analysts. The Reliance Industries share price has remained in spotlight post the telecom tariff hikes announced by most telecom operators. As the analysts see improved profitability in the telecom business, boosting earnings prospects they also remain positive on the retail business prospects.

UBS Research target price of ₹3420 indicates almost 10% more upside for Reliance Industries share price trading at close to ₹3110 levels

Consumer business to drive earnings.

UBS research that expects Reliance Industries earnings before interest tax depreciation and amortisation are set to rise 5% year on year during Q1. They add that the mix has tilted towards the consumer businesses.

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The performance of digital (Jio) and retail should remain strong with Ebitda rising 12% year-on-year an 3% sequentially leading to the share of these businesses rising to 50% compared to Q4 share of 45%.

UBS expects Reliance Q1 FY25 Ebitda at around ₹40,200 core, up 5% YoY but down 6% sequentially impacted by a decline in O2C (oil to chemicals) earnings that offsets a sustained performance for the consumer business.

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The O2C earnings are expected to moderate sequentially for Reliance Industries due to a sharp decline in refining margins, while petchem segment also remain subdued. Overall, they estimate consolidated net profit at Rs16300 crore (up 2% YoY, down 14% sequentially, assuming a 25% tax rate).

Jio subscribers increase, while retail sales growth persists

With Jio, US Research anticipates robust net subscriber additions of 10.0 million in Q1FY25 (42.5 million in FY24) and constant Average revenue per user *ARPU) of Rs182 per month, which will propel a 2% quarterly increase in Ebitda to Rs14,900 crore. With a steady Ebitda margin of 7.6%, they also project year on year and sequential gross revenue growth in retail of 16% and 6% respectively, helped by store expansion during the previous two years.

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