Analysts at JP Morgan Asia Pacific Equity Research said in their report that Reliance Digital (Electronics) posted its best quarter ever and growth in metrics.
Despite the impact of the second wave of Corona, RJio maintained its base after the Jio Phone launch in 4QFY21.
Reliance Industries Limited’s June quarter performance was in line with expectations and Jio, Retail and Oil to Chemical business are the three most important contributors to Reliance’s growth and are expected to continue. The stock rose up to 1.5% in early trade on Monday but lost most of the gains as the day progressed.
The O2C (Oil to Chemical) business reported resilient performance, with Ebitda growing 7% sequentially despite the impact of Covid. Notably, it was the fourth successive quarter of growth after the first wave. While domestic demand for fuel and downstream chemicals saw some impact from the lockdown, operational performance benefited from improvement in firm petrochemical margins and refining margins.
Refining margin will also be better
The company said the O2C series benefited from favorable margins, feedstock and energy cost optimization. The oil to chemical segment was relatively flexible and Ebitda grew further. In addition to higher volumes (throughput + up 2% sequentially), we expect refining margins to be marginally better, said analysts at Nomura Global Equity Research.
The performance of the strong and better-than-expected Digital Services business was impressive. The total subscriber base of 440.6 million as of June 2021 meant that there was a net addition of 14.3 million subscribers in 1Q FY22. The company also managed to maintain the User Average Revenue or ARPU. The company said, “The ARPU of Rs 138 was offset by the impact of COVID, with improved customer mix and better weather.”
What is the opinion of analysts about Reliance Industries
Most analysts remain positive about Reliance Industries’ growth prospects.
Analysts at Motilal Oswal Financial Services Limited (MOFSL) said, “Despite the impact of the second wave, RJio maintained its groundwork post Jio Phone launch in 4QFY21.” Analysts remain positive about the outlook for the digital services business as well. Analysts at Nomura said, “With increasing market share, fiber-to-the-home/enterprise ramp-up, strategic tie-ups, in-house 5G capabilities, spectrum footprint and growth in digital ecosystem rollout, the outlook remains strong. “
However, the retail business felt the heat of the pandemic, reducing the footfall, affecting revenues at Reliance stores. The company said that the footfall at its stores was at 46% of the pre-Covid levels. Although grocery sales remained resilient, it did not stop the 46.1% sequential decline in Ebitda.
With caution amid fears of a third wave, a recovery in footfall is expected. Nevertheless, increasing e-commerce activity augurs well. JioMart saw a 25% sequential increase in the number of orders with 75% repeat orders. It has expanded to 218 cities.
Grocery partnerships grew 33% sequentially. Analysts at JP Morgan Asia Pacific Equity Research said in their report that Reliance Digital (Electronics) posted its best quarter ever and growth in metrics.
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