HDFC Securities rating on RIL is premised on (1) induction of Facebook, Google, Intel and Qualcomm as partners in Jio Platforms, which should help the company accelerate the growth of digital connectivity and create value in the digital ecosystem through technology offerings; (2) recovery in refining and petchem businesses in FY22E; (3) the emergence of a clear path to a stronger balance sheet; and (4) stake sale in the retail business.

RIL reported standalone revenue/EBITDA of INR 807/102bn, +9/-10% YoY and +32/+17% QoQ (17/18% above than our estimates) in 4Q. Standalone APAT stood at INR 76bn, +195/-12% YoY/QoQ (HSIE est: INR 56bn).

Standalone Oil to Chemicals (O2C) segment: Revenue grew 27% QoQ to INR 896bn, primarily on account of higher volumes and higher realisation across product portfolios. Higher realisation was led by strong average Brent crude price, mainly due to weather-related supply disruption and continued supply cuts by OPEC plus countries. EBITDA for 4Q improved by 23% QoQ to INR 112bn, primarily due to improved cracks for transportation fuels and higher deltas for polymers and integrated polyester chain. Crude throughput declined 7% YoY and grew 2% QoQ to 17.1mmt. In 4Q, high operating rate of plants were witnessed across manufacturing facilities with crackers operating at full throughput.

RJio: Revenue declined by ~6% QoQ to INR 183bn due to transition from Interconnect Usage Charges (IUC) to Bill & Keep regime and lower number of working days during the quarter. ARPU was reported at INR 138 (+6/-8% YoY/QoQ), while the gross/net subscriber addition was ~31/15mn with improved traction across mobility and homes.

Reliance Retail (RR): Core performance in-line: Reliance Retail's net revenue grew 20% YoY to INR 413bn (HSIE: 432bn). Core Retail performed largely in line with expectations (grew 47.6% YoY to INR 288.3bn; HSIE: INR 286.5bn). Grocery (incl. e-comm)/CE/F&L are estimated to have grown at 27/15/88/34% respectively. Adj. EBITDAM remained largely stable at 7.5% YoY (HSIE: 7.1%).

 (Harshad Katkar, Institutional Research Analyst, HDFC Securities and Nilesh Ghuge, Institutional Research Analyst, HDFC Securities)