Reliance Industries, which is the biggest entity of the country in terms of market capitalization, will be holding its annual general meeting (AGM) later today amidst a bullish outlook on the company listed by the analyst community.
In a recent report, ICICI Securities stated that the company’s FY22 annual report provided “some pertinent insights on the way the company’s character has transformed over the past 3-4 years”.
“The fiscal saw record profitability and margins for RIL’s consolidated operations, with growing scale of the consumer businesses complemented by recovery in ‘oil to chemicals’ (OTC) margins as well,” it said.
It, however, added that substantially higher capex across business segments – digital services and retail – led to a sharp compression in the return ratios in the last two years.
Overall RoE increased just 28bps and RoCE dipped 57bps YoY, driven by massive capex of Rs 1.4 lakh crore in FY22, it stated, highlighting the Rs 82,700 crore capex in digital services and Rs 29,870 crore in retail.
The domestic brokerage further highlighted the fact that the company has “continued to aggressively invest across new business segments”.
RIL invested Rs 2,810 crore in Sterling & Wilson Renewable Energy and Rs 5,550 crore in Reliance New Energy. The real estate and project management business also saw huge investments with Rs 10,000 crore invested in convertible preferential shares of RIL 4IR Realty and Rs 20,000 crore in fresh convertible preferential shares of Reliance Projects and Property Management Services.
OTC business – As per the brokerage, RIL has highlighted the following strategic priorities for the OTC segment: diversifying feedstock sourcing and minimizing feedstock costs, improving product netbacks, optimizing operating costs and accelerating transition to renewables, leveraging digital transformation, pushing domestic transportation fuel marketing, foray into EV charging and CNG retail.
Retail – Accelerate new store expansion, develop new brands, integrate acquisitions, launch and scale up new businesses, emphasis continued on growing the digital commerce business across all consumption baskets through improved offers and service capabilities, fast-track new merchant onboarding and increase wallet share across all consumption baskets, strengthen supply-chain infrastructure, and product and design ecosystems to support rapid business growth.
Digital services – Driving 4G transition, network improvement, increase adoption of JioFiber, enhancement of the digital ecosystem, 5G network rollout.
Interestingly, shares of RIL have outperformed the Sensex benchmark by a wide margin in the last six months. RIL shares have gained a little over 10 per cent in the last six months while Sensex is up only around 2.5 per cent.
Also read: Reliance AGM: 5G, green energy, Jio Platforms amid key announcements expected